The Sri Lankan Government is slashing the rate of Value Added Tax on fabric imports from 15% to 5% in a bid to help the apparel industry, in particular, small-scale exporters.
The announcement was made on 20 September by the Ministry of Finance and Mass Media following calls from importers, traders and industrialists engaged in using fabric as raw material for readymade garments.
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The rate of 15% was set in August but the industry appealed it on the grounds small-scale traders and industrialists not covered under the VAT act would suffer.
Minister of Finance and Mass Media, Mangala Samaraweera, said the decision would give a “helping hand” to proposed small-scale industrialists under the Enterprise Sri Lanka scheme.
Enterprise Sri Lanka, the subsidised loan scheme by the Ministry of Finance and Mass Media, has introduced an interest subsidised loan scheme for medium and small-scale manufacturing industrialists and they can obtain fabric as raw material at a low cost.
Apparel and textiles are the backbone of Sri Lanka’s tradable sector, representing 47% of total exports in 2016.
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By GlobalDataFrom January to July 2018, apparel exports from Sri Lanka to the rest of the world stood at US$2.8bn, up from US$2.7bn a year earlier, according to the Sri Lanka Apparel Exporters Association.
