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The Sri Lanka Logistics and Freight Forwarders Association (SLFFA) has joined the calls for urgent government action after the removal of the Simplified Value Added Tax (SVAT) scheme, warning the move could squeeze cash flows and undermine the country’s export sector.
In a strongly worded statement, the SLFFA said withdrawing the SVAT for the exporters and related service providers has added fresh financial pressure on the companies already grappling with tight margins, volatile global freight rates and rising operational costs.
The association highlighted that logistics is the backbone of Sri Lanka’s export economy and the SVAT had long helped eliminate the refund delays and cut administrative red tape.
The logistics providers relied on the SVAT for operational expenses ranging from fuel, utilities, warehouse and office rent, to capital purchases and outsourced haulage. The SLFFA cautioned that forcing these costs into the standard VAT refund cycle risks locking up working capital and creating inefficiencies.
“Exporters depend heavily on efficient supply chains. By removing the SVAT, companies will now face blocked working capital and prolonged refund cycles, which in turn weakens the ability of the sector to remain competitive in the international market,” SLFFA Chairman Channa Gunwardena said.
The association warned that the added strain could stifle investment, reduce foreign exchange inflows and derail the national export strategy. The industry players argue the SVAT was more than a tax simplification tool and that it was a strategic enabler for the foreign exchange-earning sectors. Scrapping it without an alternative risks eroding the trust of global partners, who rely on Sri Lanka’s ability to deliver cost-efficient logistics.
The SLFFA urged the policymakers to avoid repeating the past mistakes, stressing, “At a time when the country is striving to rebuild its economy, it is imperative that the fiscal measures are aligned with the broader goal of strengthening exports and securing foreign revenue.”
The logistics community is now pressing for either the reinstatement of the SVAT or a streamlined replacement that preserves cash flow and keeps Sri Lanka’s export sector competitive.
