The Hon. Hector Appuhamy

¶ 01 Thank you, Hon. Deputy Chairperson, for the opportunity. Today we are amending a tax law. We must discuss whether, given the current situation in the country, these measures should be implemented and how they will impact the nation.

¶ 02 You know the country is facing a grave issue: the United States, with the intervention of the U.S. President, has imposed a 44% tariff on our exports. This affects us in several ways. One concern is whether Sri Lanka will lose access to the U.S. export market, an important source of foreign exchange. If we lose that, there are domestic consequences: will local industries shut down? Will production processes stop? If production slows, what happens to domestic tax and other revenues? And if factories close, what becomes of the jobs of our youth and skilled workforce?

¶ 03 Against that backdrop, we are now bringing this VAT amendment. Exporters and export manufacturers are particularly affected. Previously, when importing raw materials, there was a simplified VAT mechanism: rather than paying cash upfront, amounts were accounted for on paper and settled upon export. Today, because of the U.S. tariff shock, our exporters fear losing the U.S. market and demand due to price hikes, with spillovers to global transactions.

¶ 04 This will create severe problems in other world markets too. Ultimately, the burden falls on our export sector—the very group that brings in foreign exchange, provides domestic employment, and contributes revenue. At a time when both external earnings and domestic jobs are at risk, we are re‑imposing VAT burdens.

¶ 05 The issue is not only rates, but also weak administration: even when refunds are due, businesses cannot get timely VAT credits or refunds. Proposing a 45‑day payment target is not the time for a “test.” Wrong, ill‑timed policy choices drove the country to bankruptcy. Therefore, we ask that this amendment be deferred for a period, to allow industry to confront the 44% U.S. tariff shock. When industries collapse, the entire country does. Give them breathing space with a time limit; then implement the VAT changes. If you proceed now and SMEs collapse, no one will be able to fix the damage.

¶ 06 With Sinhala New Year approaching, some businesses are already saying they cannot pay bonuses. Please, do not rush this. I respectfully request that the vote on this Bill be postponed for some time.