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Tuesday May 21st, 2024

Sri Lanka Cabinet postpones SVAT abolition

ECONOMYNEXT – Cabinet has agreed to postpone the repeal of the simplified value added tax (SVAT) to April 1, 2025.

The government had previously announced that the SVAT would be repealed on January 1, 2024.

But industry stakeholders and trade bodies had expressed concerns that Sri Lanka’s exporters would be hit hard if the SVAT system is repealed without a strong value-added tax repayment system.

“A lot of points were put forward on how the proposal to repeal SVAT would negatively impact our exporters,” Minister Bandula Gunawardena said at the Cabinet decisions press briefing.

“We are sensitive to exporters’ concerns. So in order to create more advantageous conditions for them, the President in his capacity as the Finance, Economic Stabilization and National Policies Minister, submitted a proposal for revision of the date of implementation of the relevant provisions to repeal SVAT,” Gunawardena said.

Earlier, the Joint Apparel Association Forum had said the removal of the SVAT scheme would hurt Sr Lanka exporters who are already hit by a demand contraction in overseas markets, and discourage domestic input purchases.

Sri Lanka’s Ceylon Chamber of Commerce welcomed the decision.

“This postponement allows businesses and individuals, particularly exporters, ample time to adjust operations to adapt to the impending changes,” the Chamber said in a statement.

“It also affords the government the necessary space to establish a strong tax repayment mechanism. These efforts would ensure a smoother transition and mitigate the risk of financial instability, thereby aiding in the country’s overall economic well-being.

“We view this as a positive step towards collaborative policymaking, which is beneficial to the country’s overall economic landscape.”

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The SVAT system was introduced to avoid delays in getting VAT refunds from the revenue authorities which had taken as much as 18 months before the system. (Colombo/Sep13/2023)

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Sri Lanka declares May 21 as National Mourning day over Iranian President’s death

ECONOMYNEXT – Sri Lanka declared a national mourning day on Tuesday, May 21 in view of expressing its solidarity with Iran after sudden death of Iran President Ebrahim Raisi following a helicopter crash.

President Raisi and eight others including Iranian Foreign Minister Hossein Amir Abdollahian were killed in the crash when the helicopter had a “hard landing” reportedly due to adverse weather conditions with heavy fog. However, President’s two convoy helicopters reached the destination safely.

“The Sri Lankan government has declared a national mourning day on tomorrow (May 21) on behalf of the sudden death of Iranian president Mr. Ebrahim Raisi,” the Department of Government Information said in a statement.

It also urged all the state institutions have to hoist the national flag half mast.

Raisi was in Sri Lanka on April 24 to launch the Uma Oya dam on a one-day official visit amid tight security. His helicopter crashed when he was returning to Iran after launching a dam in the Azerbaijan border.

President Raisi is seen as a hardliner and a potential successor to Supreme Leader Ayatollah Ali Khamenei.

Earlier this month, Sri Lanka’s Foreign Minister Ali Sabry said the island nation will deal with Iran for investments and trade without being caught into the United States-led sanctions.

Sri Lanka was unable to receive $450 million from Iran for a recently opened Uma Oya multipurpose project started before the sanctions.

Sri Lanka now exports tea to Iran for no dollar payment. Instead, Sri Lanka tea producers are paid by the state-owned Ceylon Petroleum Corporation (CPC) in rupees for the pending crude oil import payments for Iran.

President Ranil Wickremesinghe expressed his condolences on the tragic incident.

“Sri Lanka is deeply shocked and saddened by the tragic death of President Ebrahim Raisi, Foreign Minister Amir Abdollahian and other senior Irani official,” he said in his official X-platform.

“I express my deepest sympathies and sincere condolences to the bereaved families, the government and the people of Iran.”

Raisi, a Muslim jurist, served as the eighth president of Iran from 2021 until his death. (Colombo/May 20/2024)

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Sri Lanka helps launch Global Blended Finance Alliance

ECONOMYNEXT – Sri Lanka has joined a group of nations led by Indonesia which aims to mobilise capital to achieve carbon neutrality, Minister of Water Supply and Estate Infrastructure Jeevan Thondaman said.

The Global Blended Finance Alliance mooted by Indonesia in 2018, was formally launched at the World Water Forum in Bali today.

Among the other founding members are Fiji, France, UAE, Kenya, Luxembourg and Canada.

“Through our collective efforts, the Global Blended Finance Alliance aims to mobilise both public and private capital to help nations achieve carbon neutrality and the SDGs,” Thondaman said on social media platform X (twitter).

“The world has a USD 2.5 trillion funding gap to achieve the Sustainable Development Goals (SDGs) by 2030,” he said.

Blended finance is the strategic use of development finance, such as public and/or philanthropic funds, for the mobilisation of additional commercial finance towards sustainable development in developing countries. (Colombo/May20/2024)

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Sri Lanka rupee closes slightly stronger at 299.60/75 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee appreciated slightly to close at 299.60/75 to the US dollar on Friday, from 299.70/80 the previous week, dealers said. Bond yields were up.

A bond maturing on 15.12.2026 closed up at 10.15/35 percent from 10.05/15 percent.

A bond maturing on 15.09.2027 closed up at 10.45/55 percent from 10.25/40 percent.

A bond maturing on 01.07.2028 closed at 10.80/90 percent.

A bond maturing on 15.01.2030 closed at 11.70/80 percent.

A bond maturing on 01.10.2032 closed up at 11.90/12.05 percent from 11.85/12.00 percent. (Colombo/May20/2024)

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