The Sri Lankan Government has altered the Value Added Tax (VAT) on imported fabric to 5 percent, to support the small-scale textile companies under the Enterprise Sri Lanka Scheme. Notably, the scheme allows manufacturers to procure fabric and other raw materials at a relatively low cost.
The Lankan Budget 2018 had proposed to impose a 15 percent VAT on goods, and the same was executed in August.
“As fabric was also subject to 15 percent VAT, 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 have the adverse effect,” Sri Lanka’s Ministry of Finance said in a press release issued.
The Lankan Government is trying to support the manufacturers the same the Board of Investment of Sri Lanka recently did by providing a funding of around US $ 49,000 to companies.