The Hon. (Dr.) Anil Jayantha

¶ 01 Impact of Abolition of Simplified VAT (SVAT) on the Export Sector: Statement

¶ 02 First, the background: SVAT, adopted from 01 April 2011 under Section 2(2) of the VAT Act, used IRD-issued Credit Vouchers between Registered Identified Purchasers and Suppliers. It was a temporary arrangement, not a substitute for a fully functioning, automated VAT with refunds. Running dual systems within IRD is unnecessary when automation and timely refunds work.

¶ 03 Summary of implementation: - VAT returns are due by the end of the following month. With SVAT abolished from 01 October, the October return can be filed via e-filing from 01 November or earlier. - A new Risk-Based Refund Scheme (RBRS) ensures refunds within 45 days from the due date; exporters need not wait till the deadline and may file earlier; claims are processed immediately upon submission in the e-filing system. - Refunds are processed based on risk ratings derived from past records and IRD data. - Low/medium-risk exporters receive refunds within 45 days without pre-verification. - High-risk exporters also receive refunds within 45 days, subject to pre-verification. - All eligible persons receive timely refunds if tax compliance is met. - Competitiveness is not harmed; implementation strengthens the business environment and planning certainty. - SMEs are not adversely affected. If direct exports exceed 50% of total supplies, the exporter automatically qualifies for the 45-day refund window; there is no turnover threshold. - Deemed exporters are not adversely affected; they can collect VAT from exporters and experience a net liquidity gain.

¶ 04 We are transitioning to a fully automated VAT refund system, with trials and simulations completed. Post-first refund cycle, we will address any issues that arise. I table the detailed answer.