The Hon. Ravi Karunanayake

¶ 01 Hon. Speaker, I seek leave under Standing Order 27(2).

¶ 02 Effective from 1 October 2025 the Simplified VAT (SVAT), a vital tool supporting exporters’ cash flow, is to be abolished reportedly under IMF EFF policy directives. The alternative is a VAT refund system with a 45-day processing assurance. Exporters have serious concerns due to Inland Revenue Department’s historical refund delays — some pending since 2007.

¶ 03 Compounding this, new universal US tariffs reduce Sri Lankan competitiveness. Japan has a 15% deal with the US; Vietnam 20%; the Philippines 19%; India 15–18%; I hear Indonesia 19%.

¶ 04 Exports are critical to recovery, FX stability and jobs. Abruptly scrapping SVAT without a tested refund mechanism risks cash-flow crises, closures and loss of competitiveness. Companies are shifting to Dubai, the Bahamas, Malaysia, etc.

¶ 05 Accordingly, I ask:

¶ 06 1. On what basis is the Government abolishing SVAT amid such economic conditions, given exporters’ distrust of IRD refunds? 2. What legal, administrative and technological safeguards ensure the promised 45-day refunds? I hear a risk assessment limited to 10–15 companies first — this alarms exporters. 3. Can a third-party audit mechanism or certification be introduced to protect exporters from refund delays? 4. Has the Government assessed impacts on specific exporters whose revenues depend on immediate payments? 5. What policies have been adopted to avoid disruption to business operations during the transition? 6. Can IRD deploy a fully developed and tested risk-based VAT refund system that guarantees timely refunds? 7. Will the IMF recommendations and the Government’s plan to abolish SVAT, and all related information, be presented to Parliament? 8. Considering MSMEs’ cash-flow vulnerabilities, is the Government ready to introduce bridging facilities such as tied credit lines, VAT offset mechanisms or interim payment channels?

¶ 07 Thank you.