The Joint Apparel Association Forum (JAAF) has welcomed Sri Lanka’s latest budget but expressed serious concerns about the potential consequences of prematurely removing the simplified value-added tax (SVAT) without a clear and tested alternative.
JAAF emphasized that a smooth and transparent transition from SVAT is vital to maintaining the competitiveness of the apparel industry and sustaining investor confidence. It highlighted the importance of timely VAT refunds and a strong mechanism to prevent delays, which are crucial for safeguarding exporters’ liquidity.
The Forum, which has long advocated for a digital VAT refund solution with minimal human intervention, warned that a poorly managed transition could lead to cash flow constraints, disrupt operations, and harm Sri Lanka’s reputation as a reliable sourcing destination, especially as global brands prioritize supply chain stability.
The apparel sector, contributing over 40% of Sri Lanka’s total merchandise exports, called on the government to work closely with industry stakeholders to ensure a seamless VAT transition, incorporating efficient digital refund mechanisms to avoid disruptions.
JAAF also recommended that proposed private sector wage increases be combined with the removal of the two Budgetary Relief Allowance Acts, thereby consolidating the National Minimum Wage, including all allowances.
The Forum stressed that clarity in tax administration, timely execution of trade facilitation measures, and a continued focus on export competitiveness are essential for achieving the country’s ambitious export targets.
