By: Staff Writer
July 08, Colombo (LNW): In a strategic move aimed at revitalising tourist spending and enhancing revenue collection through formal retail channels, the Sri Lankan Government has reintroduced the Tourist VAT Refund Scheme (TVRS). This long-anticipated revival is not only expected to improve the shopping experience for visitors but also stimulate the local economy, particularly in the retail and manufacturing sectors.
Prompt VAT refunds are a proven global practice that directly incentivises high-spending international travellers, particularly those seeking luxury goods such as gems, jewellery, and handicrafts.
For Sri Lanka, the timely implementation of a fully operational TVRS can significantly enhance its competitiveness against regional tourism markets like Thailand and Singapore, where refund schemes are seamlessly integrated into the airport departure experience.
The more tourists are encouraged to shop within formal retail networks due to the promise of VAT recovery, the greater the revenue inflows to the country—both through direct spending and enhanced tax compliance.
At a time when Sri Lanka is seeking to accelerate post-crisis economic recovery and attract high-value visitors, this initiative represents a practical, high-impact policy tool.
The Inland Revenue Department (IRD) officially reactivated the TVRS on Friday at a newly established VAT refund counter located in the Departure Terminal of Bandaranaike International Airport (BIA). The inauguration ceremony was attended by Industries and Enterprise Development Minister Sunil Handunneththi and Deputy Minister of Finance Dr. Anil Jayantha.
Under the revamped system, eligible tourists over the age of 18 who have stayed in Sri Lanka for less than 90 days may now reclaim VAT paid on purchases exceeding Rs. 50,000 (excluding tax), provided they meet the necessary documentation requirements. This system is expected to channel more transactions through the formal retail sector, reducing tax evasion while simultaneously encouraging larger tourist purchases.
The policy relaunch was endorsed by the President on March 14, following coordinated submissions by the National Gem and Jewellery Authority (NGJA) and the Industries Ministry. Minister Handunneththi highlighted the scheme’s dual benefits—supporting local industries while driving formal-sector compliance.
He praised the NGJA for championing the initiative during the inaugural meeting of the Export Development Council of Ministers (EDCM) under the current administration.
The TVRS reintroduction complements broader efforts to position Sri Lanka as a premier tourist shopping destination while enhancing tax policy enforcement. Officials from the IRD, NGJA, and other state agencies were present at the launch event, signalling a cross-agency commitment to the success of the program.
If implemented effectively and promoted widely, the VAT refund scheme could mark a turning point in elevating Sri Lanka’s appeal to international travellers and strengthening its fragile fiscal position through more robust retail tax capture.
