Sri Lanka is implementing comprehensive unilateral trade liberalisation including the rationalization of para-tariffs which add costs to business and consumers.
Para-tariffs on imports will be phased out over five years, while products related to tourism, manufacturing, and construction will be free of para-tariffs over three years, Finance Minister Mangala Samraweera told a media conference in Colombo on Wednesday.
Clarifying certain misinterpretation of his 2019 budget proposals, Minister Samaraweera noted that Sri Lanka will abolish para tariffs in around 1000 items but will help domestic industry to reach international markets.
The Treasury is expected to give up Rs. 6 billion in revenue with the removal of para-tariffs, he said adding that 10 percent of all HS codes, considered to be sensitive items, will not be subject to a complete para-tariff phase-out.
“In fact, 1,200 para tariffs have been removed in the last Budget and we have committed ourselves to removing all the 3,000 odd para tariffs while gradually phasing it out para to encourage competition and reduce the cost of living,” the Minister pointed out.
Budget 2019 proposes to replace the 2.5 percent existing stamp duty with 3.5 percent Nation Building Tax (NBT) on overseas payments using credit cards.
Minister Samaraweera said that this will not affect local online transactions of companies like takas Uber and AliExpress which are not subject to any taxes operating in Sri Lanka.
A 200 percent cash margin at the time of opening of Letters of Credit to import vehicles has been removed with effect from last Friday, he disclosed.
Finance Ministry has increased fuel prices which is far below the price computed by using fuel pricing formula with the aim of providing benefits for people during upcoming Sinhala and Tamil New Year festive season, he claimed pointing out that according to fuel pricing formula, petrol prices should have been increased to Rs. 137 rupees a litre, but it was raised only to Rs. 132 rupees.
Diesel prices should have been hiked to Rs. 117 rupees a litre, but it was only increased to Rs. 102, he said noting that the government has intervened to reduce the prices.