JAAF Urges Delay In SVAT Removal Until Systems Are Ready

COLOMBO (News 1st); As Sri Lanka prepares to remove the Simplified Value Added Tax (SVAT) scheme on October 1st, the Joint Apparel Association Forum (JAAF) has called for a proven and seamless VAT refund mechanism to safeguard the stability of the country’s export sector.

JAAF reaffirmed its commitment to working with government authorities during the transition, while expressing concern over the lack of a trial run to demonstrate the readiness of the Inland Revenue Department’s (IRD) systems to process refunds within the legally mandated 45-day window.

The apparel industry, a key contributor to Sri Lanka’s export earnings, estimates that Rs. 12 billion will be paid in VAT once SVAT is removed.

Timely refunds are essential to maintain cash flow and supply chain stability, especially amid global price pressures and reciprocal tariffs from the US.

JAAF also highlighted risks to deemed exporters, who have helped build a USD 1 billion raw material base in Sri Lanka.

These suppliers face immediate competitiveness challenges without SVAT protections.

While authorities have committed to processing refunds within the 45-day period, JAAF noted that system integration issues between Sri Lanka Customs, IRD, and exporters remain unresolved.

The RAMIS platform, previously flagged for performance issues, is still undergoing technical development, and the e-invoicing pilot project will not be ready by the October deadline.

JAAF urged a pragmatic approach, recommending that implementation be phased or deferred until systems are fully tested, similar to the approach taken with VAT on digital services.