Sri Lanka’s opposition leader, Sajith Premadasa, has strongly criticized the government’s move to abolish the Simplified Value Added Tax (SVAT) scheme for exporters, warning that it could harm foreign exchange earnings and reduce the competitiveness of Sri Lankan goods in global markets.
Premadasa said on X (formerly Twitter) that ending SVAT would tie up exporters’ capital, increase costs, and weaken their ability to compete internationally. He urged the government to renegotiate its program with the International Monetary Fund instead of “blindly accepting” conditions that risk strangling the export sector.
The Inland Revenue Department announced that SVAT will end on October 1 and be replaced by a risk-based refund scheme. Under the new system, exporters and other eligible taxpayers will be classified as low, medium, or high risk, with refunds issued within 45 days depending on the assigned risk rating.
While officials say the change aims to ensure timely refunds and improve compliance, exporters have warned it could trap working capital and raise financing costs at a time when the country is striving to increase dollar inflows.
Premadasa concluded that the government’s decision “hurts the very people bringing in dollars” and cautioned that the policy could lead to “disaster” unless reversed.
