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Tuesday May 30th, 2023

Sri Lanka publishes trade taxes for import substitution economy, new duty list

ECONOMYNEXT – Sri Lanka has published a series of value-based and per unit cess taxes to limit competition from imports for domestic producers and keep prices up, as part of an import substitution economy.

A revised list of import duties were also released with a maximum rate at 15 percent and some items coming in at zero duty. Over 2,575 items and sub-items came under the cses taxes in a kind of negative list layer on top.

Some items could be imported sans the tax under permits or approval from the relevant ministry and the Director General of Customs.

Many of the businesses had been in operation for decades lobbying for continued protection indefinitely. Some are monopolies or oligopolies in their areas of business.


Sri Lanka protectionism to continue, three band tariff for some

However large investors would also be allowed to bring in duty free items.

Motor cycle tyres are taxed at 30 percent or 180 rupees a kilogram, whichever is higher.

Bicycle tyres are taxed at 30 percent duty or 210 rupee cess. Three wheeler tyres are also taxed at 30 percent r 170 rupee per unit cess.

Shoes are taxed at 1,000 rupees a pair while uppers are taxed at 920 rupees and a 15 percent duty.

Leaf springs a heavy item is taxed at 15 percent or 17 rupees a kilogram whichever is higher. However raw steel is allowed in as an input.

Radiators are taxed at 40 percent or 2,400 rupees a unit.

Several grades of RSS and crepe rubber are taxed at 40 rupees kilogram.

Tiles are taxed at 50 percent or 183 rupees a unit. Squatting pans are taxed at 15 percent and 12 rupees. Tableware is taxed at 15 percent or 115 rupees a kilogram. Granite is taxed at 50 percent or 40 rupee a kilogram.

Paints are taxed at 200 rupees a kilogram. Nails are taxed at 15 percent or 165 rupees a kilogram.

Sanitary towels and tampons are taxed at 15 percent.

Lipstick is taxed at 4000 rupees a kilogram, eye-shadow at 4,700 rupees. After-shave is taxed at 700 rupees and deodorants 800 rupees.

Shampoos are taxed at 1,000 rupees a kilogram.

Baby diapers at 15 percent. Fabrics are taxed at 100 rupees a kilogram and garments at 200 rupees a unit.

Many vegetables are taxed at 45 percent or 200 rupees a kilogram. Some exported teas are taxed at 15 percent.
Powers had been given to allow the import of raw material with permission from secretary to the relevant ministry such as industries or agriculture and the Director General of customs.

Raw materials for fashion jewellery, drugs or medical devices registered at the National Medicines Regulatory Authority could be imported.

In Sri Lanka some imported items are subject to import duty, cess, port and airport levy and value added tax on top.

Items coming under special commodity levy are subject to a simple single tax.

New post budget import duties were also published.

Many items are under zero duty and some are at 4.5 or 5 percent subject to a maximum of 15 percent.



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Sri Lanka cabinet approves President’s proposal to resume Japanese LRT after soared ties 

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe to resume the unilaterally cancelled Japan funded Light Rail Transit (LRT), cabinet spokesman said, as the island nation is in the process of mending ties with Tokyo.

However, any such deals are likely to take place after the debt restructuring and Sri Lanka starts to repay its foreign loans to come out of default, analysts say.

Former President Gotabaya Rajapaksa unilaterally cancelled the 1.5 billion US dollar LRT and East Container Terminal (ECT) projects in 2021. Japan agreed to fund the LRT project while it was one of the tripartite members of the ECT project along with India and Sri Lanka.

The abrupt cancellation hit the diplomatic ties between the two countries and Sri Lankan government officials have said Japan had given the project to Sri Lanka at a very lower financing cost.

President Wickremesinghe returned from Japan late last week after having met top officials of the Japanese government including its prime minister.

“In recent history, due to the stopping of several agreements and proposals suddenly, President Wickremesinghe went to Japan after creating the background to clear some of the worries we have,” Cabinet Spokesman Bandula Gunawardena told the weekly media briefing.

“Before he went, he got the approval from the cabinet to resume the discussion on the light railway project. He got the approval from the cabinet to get parliament approval for bilateral agreements signed or any other investments project. Any change or cancellation of a project could be done only with the approval of the parliament.”

Japan has backed Sri Lanka under Wickremesinghe’s presidency after the island nation declared sovereign debt default. (Colombo/May 30/2023)

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Sri Lanka to tighten grip on television with broadcast law

ECONOMYNEXT – Sri Lanka has formulated a broadcast authority law to regulate electronic media which will be made public soon, Cabinet spokesman Minister Bandula Gunawardana said.

“The draft prepared by a cabinet subcommittee under Justice Minister Wijedasa Rajapaksa has discussed with various parties will be given to all media institutions and broadcast media,” Gunawardana said.

“We do not have to hide or force anyone. A legal framework that can be acceptable to all for all sectors.”

“In a week or two Minister Wijedasa will discuss with state and private stakeholders.”

At the moment Sri Lanka has issued frequencies without conforming to an “international procedures”, he said.

In Sri Lanka television frequencies are issued under a state television act.

Successive administrations in Sri Lanka has since around 1980 mis-used state television duopoly which including for conducting elections according to critics.

Private television as well a raio emerged around the 1990s and has since over shadowed state media.

There have been calls by ruling party politicians from time to time to control private media. There is now calls to control social media.

At a Committee on Public Accounts meeting of the Department of Government Information, ruling coalition legislators called for regulation of television content. (Colombo/May30/2023)

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Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

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