The Joint Apparel Association Forum (JAAF) has raised concerns about the government’s decision to transition from the Simplified Value Added Tax (SVAT) scheme to a risk-based refund mechanism as part of the broader VAT system overhaul.
The association cautioned against the premature removal of SVAT without a clear and well-tested alternative.
JAAF had previously advocated for a digital VAT refund solution that minimizes human intervention to ensure greater efficiency and transparency.
A poorly managed transition, they warned, could lead to cash flow issues for exporters, disrupt business operations, and damage Sri Lanka’s reputation as a reliable sourcing destination, especially as global brands prioritize stable supply chains.
The apparel industry is a major contributor to Sri Lanka’s economy, accounting for over 40% of the country’s total merchandise exports.
JAAF stressed the importance of ensuring a smooth and transparent transition from SVAT, as timely VAT refunds and an efficient mechanism to avoid delays are essential for maintaining industry competitiveness and sustaining investor confidence.
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