SL to eliminate para-tariffs on imports within five years on phased-out basis

President Ranil Wickremesinghe yesterday proposed to eliminate para-tariffs on imports within a five-year period on a phased-out basis, commencing from January 1, 2023, with a view to build a globally competitive manufacturing industry.

“In order to promote the manufacturing industry, to remove the existing barriers to international trade, to provide the necessary incentives and facilities for local industries and projects including agriculture, the CESS levy will be eliminated on phased basis in three years, commencing January 1, 2023. For Ports and Airports Development Levy, I suggest to Phase out completely in five years,” Wickremesinghe announced, delivering the 2023 budget speech in Parliament yesterday.
However, he noted that the proposed tax policy would not be applicable for the CESS levy imposed on agriculture-based value-added industries.

In order to accommodate the proposed phasing out of para-tariffs, he noted that the existing three-band import duty system at Sri Lanka Customs of 0 percent, 10 percent and 15 percent, would be revised to 0 percent, 15 percent and 20 percent, with effect from January 1, 2023.
Para-tariffs are viewed as a popular protectionist measure that often results in deterring competition and higher prices for the consumer. It also over-complicates tariff administration and acts as a barrier to global trade dominated by global value chains.

As the country is yet again attempting to promote international trade along with potential bilateral and multilateral trade agreements, Wickremesinghe announced that the government is in the process of introducing a Trade Adjustment Programme to develop local industries to compete globally.