SVAT carpet bomb creates chaos for exporters
The repeal of the SVAT has thrown the export sector into total chaos as industry heads vented their frustration over government insistence to implement an 18 per cent “carpet bomb” on all sectors that could lead to delays in paying tax refunds and systematic depletion of monies in the absence of a fully digitised system.
Exporters say they want the authorities to delay imposition of 18 per cent tax on exports to be refunded within 45 days; which exporters do not believe will be carried out to the letter by the Inland Revenue Department (IRD) based on past experiences.
These concerns were raised at a media briefing held in Colombo on Thursday at the Courtyard by Marriott organised by the tea, coconut, apparel sectors represented by the Joint Apparel Association Forum (JAAF), Sri Lanka Apparel Exporters Association (SLAEA), the National Chamber of Exporters (NCE), and the Exporters’ Association of Sri Lanka (EASL) and the Tea Exporters Association (TEA). Under this new system exporters have to file their returns by the end of the month and make payments. What the exporters want is the system to be digitised and plug into their SAP. “We didn’t say we can’t pay VAT, what we say is we have no confidence in this new system,” NCE Secretary General/CEO Shiham Marikkar said adding that this kind of carpet bomb on all exporters was unfair due to the small leakage by a few.
Exporters highlighted that they face high labour and electricity costs and further 20 per cent tariff on goods to the US.
A fully digitised system needs to be in place before going ahead with this new system and as a result exporters insisted that authorities should accept that they are not ready and delay the implementation.
Exporters have held extensive meetings over the past year with all government agencies connected including the IRD, the Customs, the Treasury as well as President Anura Kumara Dissanayaka.
Assurances have been given to exporters that authorities are ready to make refunds within 45 days but this is the main concern of exporters as they claim that based on past experiences delays have happened by even 10 years.
Mr. Marikkar responding to questions stated the government is not supporting them on this issue. “In eight months to one year we can see what will happen and exporters will be losing their money. We will face a situation finally where exporters will have no money to do business,” it was asserted.
Some exporters in fact pointed out that the issue of corruption is also likely to sink in as in the past as people-to-people contact is a big disaster.
JAAF Spokesman Yohan Lawrence said that government insists that they will remain committed to making the tax refunds within 45 days.
SLAEASL Chairperson Rajitha Jayasuriya noted that the government plans to carry out a pilot project with MAS and Akbar Brothers which involved a temporary API that plugs into the upgraded RAMIS system done by the National Computer System of Singapore.
This is a mini system for e-invoicing but this has not been set up. “We don’t have faith in the RAMIS system and we want a fully digitalised system,”
The tea industry is more concerned since this is the first time they will be compelled to pay an 18 per cent tax refund on exports.
“When we pay 18 per cent VAT on tea then we have to wait 10 weeks for the refunds,” TEA Chairman Ganesh Devanayagam said.
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