The Hon. (Dr.) Anil Jayantha - Minister of Labour and Acting Minister of Finance, Planning and Economic Development

¶ 01 Hon. Deputy Speaker, a brief clarification on SVAT. It is incorrect to say we are acting purely under an IMF condition. SVAT is not a sound VAT collection mechanism. It was a temporary measure adopted because Sri Lanka’s VAT system was not operating comprehensively across the economy. Studies show SVAT causes significant revenue leakage and opens avenues for fraud and corruption. We are moving to prevent that.

¶ 02 Following simulations and analysis by the Inland Revenue Department, we will remove this mechanism from the 1st of next month. This will not only improve efficiency but also ensure refunds to exporters within an average of 45 days. We will apply risk-based processing—low, medium and high risk—so low-risk claimants can receive refunds within 20 days, provided they submit their income tax returns. Our approach is to move step by step to a better system, eliminate avenues for abuse, and strengthen integrity in revenue administration.