VAT on imported fabric reduced to 5%

Tuesday, 18 September 2018 00:17 - - {{hitsCtrl.values.hits}}

Finance Minister Mangala Samaraweera, considering the requests made by the stakeholders in the fabric industry, has reduced the Value Added Tax (VAT) on imported fabric to 5%.

The Minister signed the Gazette notification in this regard yesterday. Earlier, the fabric was subject to Rs. 100/kg CESS at the time of imports.

The Budget 2018 had proposed to impose a 15% VAT on goods, the Value Added Tax Act No. 14 of 2002 was amended accordingly, and the new VAT scheme came into effect from 16 August.

As fabric was also subject to this 15% VAT, the importers, traders and industrialists engaged in using fabric as raw material for making readymade garments had appealed to the Minister of Finance to provide them some relief as small-scale traders and industrialists who are not covered under VAT Act suffer adverse effects.

The Minister made this decision to amend the VAT Act further to reduce the VAT on imported fabric to 5% considering the possibility of giving 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.