Sept 18, 2018 (LBO) – Sri Lanka’s Finance Ministry issuing a gazette amended the Value Added Tax (VAT) act further to reduce the VAT on imported fabric to 5 percent in a bid to help small scale industrialists under the enterprise Sri Lanka scheme.
“The Minister of Finance and Mass Media MangalaSamaraweera considering the requests made by the stakeholders in the fabric industry has reduced the VAT on imported fabric to 5 percent,” the Finance Ministry said in a statement.
The Minister signed the gazette notification, Monday.
Earlier the fabric was subject to Rs 100/kg CESS at the time of imports. The Budget- 2108 had proposed to impose a 15 percent VAT on goods, the Value Added Tax Act No 14 of 2002 was amended accordingly, and the new VAT scheme came 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 ready-made garments had appealed to the Minister of Finance to provide them some relief as small scale traders and industrialists who are not covered under VAT act have the adverse effect.
The Enterprise Sri Lanka, the subsidized loan scheme by the ministry of finance and mass media 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.