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Retailers want 12-month tax moratorium  

29 Jun 2022

 
  • Request exemption from VAT, Social Security Tax
  • Minimum six months’ moratorium urged
  • Notes lack of co-ordination between Govt. and sector
  By Imsha Iqbal     The retailers in Sri Lanka are in dire need of a tax moratorium for a period of 12 months to sustain their businesses amidst the economic crisis prevailing in the country, The Morning Business learns.  Speaking to The Morning Business, Sri Lanka Retailers’ Association (SLRA) Founding Chairman and President Hussain Sadique stated: “The Government has to provide either moratoriums, or tax relief, because we (the retailers) have been overtaxed now.” He explained that the retailers are now burdened with the Value-Added Tax (VAT) and Social Security Contribution (SSC) Tax at a time when the demand for retail business is also deteriorating, while supply chains have been disrupted due to the fuel crisis.  The SLRA President stressed that this moratorium needs to be in effect for at least six months to one year, as people are affected by the limited availability of transportation.  “When people work from home, they do not need transport. Thus, everybody, consequently, is going to be affected, since this is a system where each sector is in a chain together,” he said. Further, he said that black market activities need to be curbed through macroeconomic solutions, as those legitimately engaged in the industry would otherwise perish while the black market players would be able to function due to the existing market conditions such as overstocking, and third-party buying and selling. However, he said he has not observed any co-ordination by the Government in this regard even though they were able to meet the Prime Minister and the President at separate meetings. He also stressed that practical, scientific solutions need to be implemented, rather than politically motivated ones.   The Sunday Morning Business reported on 19 June that Ceylon National Chamber of Industries (CNCI) Chairman Canisius Fernando also expressed a similar stance on the response of the Government relating to the concerns on imposing the SSC tax. He had said: “We do not see any integration amongst the ministries for a common objective. The President talks with one group, while the Prime Minister talks with another. The Prime Minister is also holding discussions with people who are not decision-makers in this Government. There are many issues at present, and now there is a levy as well.” Sadique noted that despite some businesses operating on a larger scale, the retailers face problems in ensuring business continuity, and that the current situation cannot be compared to the lockdowns that were imposed during the Covid-19 outbreak.  He added that a moratorium would not only support the industry’s sustenance, but would also allow them to sell goods to consumers at reasonable prices, as the tax burdens are typically passed on to the consumer in the form of soaring prices. He thus urged the Government to provide retailers with solutions within a few months, since they are running out of stocks.  “We normally operate with three months of stocks, but these stock levels have come down.”   When asked about the announcement made by the All-Island United Container Owners’ Association (AIUCA) that container transportation fees were increased by 10% with effect from Tuesday (28) onwards, he responded that the increase of the aforesaid fee was a minor issue in comparison to the challenges faced by the retail industry due to the dollar crunch.  


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