Govt. ends imports licencing of select products but slaps higher taxes

• Move sends prices of popular consumer and household products higher by 15 to 200%

The Government has done away with licencing of non-essential imports, a move enforced in March but slapped higher taxes as a restrictive measure to better manage the pressure on scarce foreign reserves. 

Given the difficult economic situation in the country, the Government yesterday requested all stakeholders to rationalise imports on the basis of importance and urgency to save the limited foreign exchange for essential commodities to ensure uninterrupted supply.

In this backdrop, the Finance, Economic Stabilisation and National Policies Ministry announced two actions under the Imports and Exports Control Act No. 01 of 1969 — (i) Postponement of Effective date of the Imports Control Regulations on Payment Terms No. 07 of 2022 published on 6 May and (ii) Termination of Imports and Exports Control Regulations No. 05 of 2022 and No. 06 of 2022 effective from 1 June.

Imports Control Regulations on Payment Terms No. 09 of 2022 has been promulgated and published in the Gazette No. 2281/22 dated 31 May 2022 giving effect to the postponement of the effective date of the Imports Control Regulations No. 07 of 2022 from 20 May to 7 June 2022. 

As per this move, any cargo, or consignments, imported under the Open Account Payment Terms, Documents against Payment or Documents against Acceptance can be released from the Sri Lanka Customs as per general practice applicable prior to 7 May till 6 June 2022.

Imports and Exports Control Regulations No. 08 of 2022 has been promulgated and published in the Gazette No. 2281/21 dated 31 May 2022. 

Accordingly, a total of 369 HS Codes, which were regulated by the said Regulations above can be imported without Import Control License effective from 1 June 2022, subject to applicable rules and regulations including duties and taxes at the time of Customs clearance of cargos/consignments.

Separately, the Finance Ministry slapped higher special commodity levy on nine types of items again including imported fruits. With the new tax hike, the prices of imported yoghurt, cheese, butter, other dairy spreads, all types of grated or powdered cheese, dates, apples, grapes, oranges, and other fruits will go up significantly.

The Finance Minister Ranil Wickremesinghe has made this increase under the Special Commodity Levy Act.  Special Commodity Levy for imported yoghurt, other dairy spreads, dates (dried and fresh) and fruits has increased by 100%, whilst butter has increased by 850% and all types of grated or powdered cheese is up by 250% from the previous tax hike announced on 3 March 2022. 

A special commodity levy of Rs. 2,000 per kilo has been imposed on yoghurt and dairy spreads, whilst the tax on butter will increase by Rs. 1,500 per kilo and all types of grated or powdered cheese will increase by Rs. 600 per kilo.

The special commodity levy on apples, grapes (dried and fresh) and oranges will increase by Rs. 600 per kilo, while the tax on a kilogram of dates (dried and fresh) will increase by Rs. 200 per kilo. Chocolates will cost 200% more. 

Based on new move, tyres for cars, motorcycles, and trishaws will cost 50% more, ACs, washing machines, rice cookers, refrigerators and phones will cost 100% and other electrical appliances by 15%.

In the first quarter of this year, imports have grown by 12% to $ 5.6 billion, though in March the value dipped by 5.6% year on year to $ 1.8 billion.