Sri Lanka, Oct. 1 -- The uncertainty regarding the consequences of VAT payments in the tea industry with the abolition of SVAT (suspended VAT) from October 1, 2025 and possible cash flow issues, drop in tea prices have sent concerns through the entire supply chain of the local tea industry.
At the tea auction in Colombo, on average 5-6 million kg of teas are sold every week. Based on current average tea auction prices the 18% VAT payment on tea sales amount to Rs. 4 billion per month. Due to the competitive nature of the global tea industry, most tea export companies operate on low margins and will have to resort to bank borrowings to cover the additional cash flow requirement that arises from the imposition of VAT on the tea industry. The...