News
JAAF opposes govt. move to abolish SVATs
questions timing, given current decline in exports
urges govt. to shield sector from unnecessary internal shocks
The Joint Apparel Association Forum (JAAF) has expressed its deep concerns and disappointment regarding a recent government decision to end the well-functioning Simplified Value Added Tax (SVAT) scheme.
Cabinet spokesman Minister Bandula Gunawardena last week disclosed that the Cabinet-of-Ministers approved a proposal by President Ranil Wickremesinghe, in his capacity as the Finance Minister, to draft a Bill to do away with SVAT, with effect from Jan 01, 2024. The Minister is on record as having told the post-Cabinet media briefing that this was done in line with the agreement with the International Monetary Fund (IMF)
JAAF has issued the following statement: “JAAF, representing the interests of the apparel industry, firmly believes that the abolition of SVAT for exporters will have detrimental effects on the sector, already reeling under the pressure of declining exports, jeopardizing the cash flows of businesses and impeding the efforts to return to overall growth.
The abolition of SVAT will create a further burden on an already stressed industry and, particularly, on company cash flows, as funds will be tied up in even the most efficient refund systems, JAAF stated, adding that the impulsive and non-consultative decision will have disastrous impacts on the long-term operations of a viable sector.
Whilst recognising the need for the Government to achieve its revenue targets. JAAF notes that the abolishing of SVAT is completely revenue neutral to the Department. Removal of SVAT will only lead to increased cash flow between the Exporter and the IRD. Sri Lanka’s track record on VAT refunds is poor and prior to the introduction of SVAT, exporters had refunds due from the Department that ran into over 18 months.
It is important to note that as history has shown, the refund system that existed before the introduction of SVAT had large fraud in the non-export sector, and not among exporting companies. Exporters utilize SVAT for the purchase of local inputs, which are subsequently converted into finished products for export. As such they have very little sales locally which reduces the potential for abuse of the system. In any event the likelihood of abuse is much higher in a system based on payment and refund as against a voucher system of SVAT.
Further, the decision has seemingly failed to consider the fact that apparel exporters may be compelled to import raw materials rather than purchasing them from domestic manufacturers and having their cash flows restricted by the VAT refund system. This will lead to increased imports, a detrimental effect on both the companies and the overall balance of trade. This will result in the loss of the unique vertical integration benefits Sri Lanka apparel has to offer, which over the long term may lead to questions being raised over the viability of companies and the jobs they create
Furthermore, the reintroduction of a VAT refund system, even under the most auspicious conditions, would necessitate the allocation of substantial Inland Revenue Department (IRD) resources for the constant follow-up and evaluation which a refund system will necessitate. This will only result in increased additional administrative costs for all parties and the misplacement of precious IRD resources and distracted staff.
Therefore, JAAF firmly recommends that the removal of SVAT from the export sector be approached with utmost caution. In the current climate of declining exports and its adverse effects on companies and employees, it is crucial to shield the sector from unnecessary internal shocks that would undoubtedly occur if SVAT were abolished, urging the Government to preserve SVAT for the export sector.”
Latest News
Heat index, is likely to increase up to ‘Caution level’ at some places in Eastern and North-central provinces and Mullaitivu and Vavuniya districts
Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre of the Department of Meteorology at 3.30 p.m. 27 April 2025, valid for 28 April 2025
The public are warned that the Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in Eastern and North-central provinces and Mullaitivu and Vavuniya districts.
The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.
Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.
ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated. Dress: Wear lightweight and white or light-colored clothing.
Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.
Latest News
People have now started to think of themselves as Sri Lankans sans ethnic or religious divisions- PM
Prime Minister Dr. Harini Amarasuriya stated that for the first time in history, mosques in Kandy had opened their doors to accommodate the needs of devotees visiting the Temple of the Sacred Tooth Relic and that people have now started to think of themselves as Sri Lankans beyond dividing into ethnicities and religions.
The Prime Minister made these remarks while addressing a public gathering held in the Paragahadeniya area in Kurunegala.
Prime Minister Dr. Harini Amarasuriya further stated:
“This country is undergoing a transformation we expected,so accordingly, we must operate in new ways. People are beginning to feel that we must work towards a new transformation. We can see this change even within our ministries. These days, sometimes when we visit ministries even after 5 PM, and ask if it is possible to have discussions, the officials are always open. Today, public officials are willing to work late into the night, until 9 or 10 PM. Officials have now started working without fear.
Remarkably, for the first time in history, Muslim mosques in Kandy remained open throughout the night to accommodate pilgrims visiting the Temple of the Sacred Tooth Relic. They even provided space for devotees to rest. There were no ethnic or religious tensions. What we saw was respect for other ethnicities and religions. This is happening because there is now a sense of a government that represents all Sri Lankan people, not just Sinhalese, Muslims, or Tamils”.
The event was attended by the candidates for the local government election including the residents of the area.
[Prime Minister’s Media Division]
The Frontline Socialist Party (FSP) has urged the NPP government to prevent Japan’s Onomichi Dockyard Company from selling its 51% ownership stake in the Colombo Dockyard Limited (CDL) to Indian government-owned Mazagon Dock Shipbuilders Limited, Mumbai, a leading shipbuilder.
FSP spokesman Pubudu Jayagoda told The Island yesterday (27) that the move seemed to be in line with the overall India-Sri Lanka understanding on the basis of the recently signed memorandum on defence cooperation.
Against the backdrop of deteriorating financial situation, the Japanese company has informed the board of directors of CDL of its plans to divest its 51 percent ownership stake in the international shipbuilding and repair company. The Japanese shipbuilder made the announcement in early Dec last year.
Alleging that an agreement has been reached on the sale of Onomichi’s controlling ownership stake to the Indian ship builder, Jayagoda questioned
the move as Mazagon primarily built a range of warships and attack submarines. Jayagoda pointed out that according to Mazagon’s profile, the Indian government-owned business undertaking was involved with European companies engaged in ship and submarine construction.
Addressing a Local Government election meeting at Weeraketiya, Pallekanda, in support of those contesting the May 6 election on the ticket of Jana Aragala Sandhanaya (JAS), the executive committee member of JAS Jayagoda emphasized that in terms of the agreement between Sri Lanka and Japan, Onomichi couldn’t sell its stake without the Sri Lankan government’s approval. Therefore, the NPP government should intervene to halt the Japanese-Indian move, the FSP spokesman said while urging the parliamentary opposition to publicly oppose the planned sale of the Japanese stake.
Among other stakeholders are Sri Lanka Insurance, Sri Lanka Ports Authority and EPF.
By Shamindra Ferdinando
Heat index, is likely to increase up to ‘Caution level’ at some places in Eastern and North-central provinces and Mullaitivu and Vavuniya districts
People have now started to think of themselves as Sri Lankans sans ethnic or religious divisions- PM
Heavy showers about 100 mm are likely at some places in Central, Sabaragamuwa, Uva, Eastern and North-central provinces and in Vavuniya, Mullaittivu and Kurunegala districts.
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