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No VAT for exported tea, local growers in a fix

by Florence Wickramage

Ceylon Tea sold within the country has been subjected to the Value Added Tax (VAT) tax whereas exported tea has been exempted, tea growers complain. The categorising of commodities for the purpose of VAT has classified Tea as a semi-essential commodity despite it being regarded as an essential commodity in the past.

The exemption of exported tea from the VAT tax has given rise to a situation whereby large scale tea exporters are making efforts to join the inland tea trade and displace small tea growers who had the monopoly of the inland tea market.

A spokesman for the Tea Smallholders Association said that Tea for export purchased at the Tea Auctions is subjected to approval by the Sri Lanka Tea Board. With the present discriminatory practice of imposing VAT for tea produced locally sub-standard tea is now flooding the market.

Moreover, tea purchased at Auctions for the purpose of export are also found in the local market resulting in causing great financial losses to the Tea Smallholder whose livelihood had been producing tea for local consumption, the spokesman said.

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