Considering the requests made by the stakeholders in the fabric industry, the Minister of Finance and Mass Media Mangala Samaraweera has reduced the Value Added Tax (VAT) on imported fabric to 5 percent. The Minister signed the gazette notification in this regard today.
Earlier the fabric was subject to Rs. 100/kg cess at the time of imports. Budget 2108 had proposed to impose a 15% VAT on goods, the Value Added Tax Act No. 14 of 2002 was amended accordingly, and the new VAT scheme came into effect from August 16, 2018.
As fabric was also subject to this 15 percent VAT, importers, traders and industrialists using fabric as raw material for making readymade garments had appealed to the Minister of Finance to provide them some relief as small scale traders and industrialists who are not covered under VAT act have the adverse effect.
The Minister reduced the VAT on imported fabric to 5 percent to give a helping hand to proposed small scale industrialists under the enterprise Sri Lanka scheme. Enterprise Sri Lanka, the subsidized loan scheme has introduced an interest subsidised loan scheme for medium and small-scale manufacturing industrialists and they can obtain fabric, as raw material at a low cost.