Sri Lanka’s BOI is trying to solve VAT hit on backward integration

ECONOMYNEXT – Sri Lanka’s Board of Investment is “actively engaged” in removing the negative impact on charging value added tax on locally produced inputs, which is discouraging backward integration, Chairman Arjuna Herath said. Sri Lanka’s apparel industries have complained that the removal of the SVAT system which allowed local producers to sell goods to exporters in a kind of VAT exempt system, has been removed, triggering cashflow problems and interest costs for exporters. In countries like Vietnam and Taiwan, sales into export firms in free trade zones are zero rated, just like for export. Under a zero rate, no VAT…

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