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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 1589

Sri Lanka: VAT on VAT

Sunil C. Perera, Reporting from Sri Lanka

Colombo, 07 May, ( Sri Lankan consumers will have to pay higher prices for imported essential food commodities due to the government’s new tax structure introduced in the last budget, according to trade associations.

“Government has implemented VAT on VAT. We can’t reduce the prices of the essential commodities due to the recently introduced tax,” said P. S. Samy, Chairman of Essential Food Commodities Importers and Traders Association.

Speaking to the Asian Tribune Samy said that the importers have to pay 5 per cent VAT when they clear the goods in the Customs.

“This is the normal duty pattern .However after the introduction of the new tax structure; we have to pay an additional 5 per cent VAT on sale value. This levy would be paid after the selling of goods,” Samy said.

“This will automatically bring about and increase in the price of all essential food products imported into the country,” he said.

According to Samy, the Association recently submitted their grievances to the President of Sri Lanka.

“The President has re-directed the proposal to the Finance Ministry. However, still we have not received a positive reply from the Finance Ministry,” Samy said.

Market sources also point to the fact that the traders and importers of essential food commodities make huge profits. According to these sources this sector will now have to cut a percentage of their profit under the new VAT structure.

Meanwhile, the government of Sri Lanka decided to charge 1 per cent Economic Surcharge on entire business turnover since last year.

“This is an’ April Fool joke,” said the entrepreneurs.

“How can we bear the cost of all the transactions that were completed last year?

We have to pay millions of Rupees, if we calculate our past business turnover,” another leading importer said.

“This is an additional burden for all,” he said.

“The total amount has to be recovered from the common man,” said the importers.

“If the government abolishes the past dues on Economic Surcharge we would like to pay this tax in effect from January this year,” they said.

“We will give ten days time for the government to abolish the Economic Surcharge for the last year and impose a single VAT structure which could be payable in the Customs.

If the government wants to impose single VAT percentage, it is very easy for us .We can pay it under one roof, without any difficulties. If they fail to do the, members of the association would consider ways and means of protesting.

Ninety percent of the essential food commodities are imported and supplied by the members of our association. If we close our businesses, the economy would be critically affected,” the Association Chairman said.

- Asian Tribune -

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