Welcoming Sri Lanka’s latest budget, the Joint Apparel Association Forum (JAAF) has raised concerns about the potential impact of prematurely removing the simplified value-added tax (SVAT) without a well-tested alternative.
JAAF emphasized that a seamless and transparent transition from SVAT is essential to maintaining the apparel industry’s competitiveness and sustaining investor confidence. It highlighted the need for timely VAT refunds and a robust mechanism to prevent delays, ensuring liquidity for exporters.
Advocating for a digitally-driven VAT refund system with minimal human intervention, JAAF warned that a poorly managed transition could create cash flow constraints, disrupt operations, and harm Sri Lanka’s reputation as a reliable sourcing destination.
As the apparel sector accounts for over 40% of the country’s total merchandise exports, JAAF urged the government to collaborate with industry stakeholders to implement an efficient digital refund process and prevent disruptions.
Additionally, it recommended that proposed private sector wage increases be accompanied by the removal of the two Budgetary Relief Allowance Acts to consolidate the National Minimum Wage, including all allowances.
JAAF also stressed the importance of tax clarity, timely trade facilitation measures, and a continued focus on export competitiveness to achieve Sri Lanka’s ambitious export targets.
