Sri Lanka’s Opposition Leader Sajith Premadasa on Tuesday criticized the government’s decision to abolish the Simplified Value Added Tax (SVAT) scheme for exporters, warning that the move would undermine competitiveness and damage the country’s foreign exchange earnings.
In a post on X (formerly Twitter), Premadasa argued that eliminating SVAT would tie up exporters’ capital, increase costs, and make them less competitive in global markets. He urged the government to renegotiate its program with the International Monetary Fund (IMF) rather than “blindly accepting” conditions that he said risk strangling the export sector.
The Inland Revenue Department announced this week that the SVAT scheme will end on October 1 and be replaced by a risk-based refund system. Under the new system, exporters and other eligible taxpayers will be classified as low, medium, or high risk, with refunds to be issued within 45 days depending on their risk rating.
Officials say the change is intended to improve efficiency, strengthen compliance, and ensure timely refunds. However, exporters have warned that the policy could trap their working capital and increase financing costs at a time when Sri Lanka is struggling to boost foreign inflows.
Premadasa cautioned that the government was “hurting the very people bringing in dollars” and warned that the decision would lead to “disaster” unless reversed.
