ECONOMYNEXT – Sri Lanka’s government said it has slashed value added tax on fabric imports to five percent from 15 percent in a move to help the apparel industry, particularly small exporters.
Minister of Finance and Mass Media Mangala Samaraweera signed the gazette notification on the tax cut Monday after requests made by the stakeholders in the fabric industry, a finance ministry statement said.
“The minister made this decision to amend the VAT act further to reduce the VAT on imported fabric to 5 percent considering the possibility of giving a helping hand to proposed small scale industrialists under the enterprise Sri Lanka scheme,” it said.
The Enterprise Sri Lanka subsidized loan scheme by the ministry of finance has introduced an interest subsidized loan scheme for medium and small-scale manufacturing industrialists and they can obtain fabric, as raw material at a low cost.
Earlier the fabric was subject to Rs 100/kg cess at the time of import.
The budget for 2108 had proposed to impose a 15 % VAT on goods with the new VAT scheme coming into effect from August 16, 2018.
“As fabric was also subject to this 15 percent VAT, the importers, traders and industrialists engaged in using fabric as raw material for making readymade garments had appealed to the Minister of Finance to provide them some relief,” the statement said.
Small scale traders and industrialists who are not covered under VAT law were hit badly by the higher tax.
(COLOMBO, 17 September, 2018)