ECONOMYNEXT – Sri Lanka will begin value added tax refunds for exporters who are considered lower risk within days, with early applications coming in the first week of the month, Director General of Inland Revenue R P H Fernando said.
Exporters are expected to make the refund application for input VAT credits by November and the Inland Revenue will keep the cash for a maximum of 45 days before returning them, under the new law.
“The first applications came on November 2-3,” Fernando said. “Though the tax law allows 45 days we are trying to make refunds very fast.
“In a day or two (there is a hetamer) we will be able to make the first refund.”
Sri Lanka tax authorities have classified companies entitled to tax refunds, based on previous interactions with the Inland Revenue as low risk, medium and high risk.
“We will make the refunds for low and medium risk exporters within 16 days, and for those considered high risk by January 15,” Nafeel Abu Bakr, Senior Commissioner – Tax Policy, IRD, said.
“We have established two special export refund branches, and appointed several officers to them,” he said.
The first report was given and 30 exporters will receive the VAT refund before January 15, he said.
Sri Lanka halted the SVAT system, where a paper input credit not was issued for local suppliers by final exporters due to earlier delays of VAT refunds.
The SVAT system was scrapped under an International Monetary Fund program, after macro-economists triggered serial currency crisis and an external default.
Under a value added tax system, exports are zero rated and the companies are entitled to claim an input tax refund which they will pay to suppliers.
However in East Asian export nations supplies into zones and within free zones are zero rated.
At the moment, exporters are allowed to bring in imported inputs tax free. (Colombo/Nov24/2025)
Continue Reading