Sri Lanka reboots Tourist VAT Refund Scheme to boost local purchases

Monday, 7 July 2025 06:08 - - {{hitsCtrl.values.hits}}

The Inland Revenue Department (IRD) last Friday officially revived its Tourist VAT Refund Scheme (TVRS) to incentivise visitor spending on local goods and encourage greater formal-sector activity in the retail trade.

The revamped service was inaugurated at the Departure Terminal of Bandaranaike International Airport, (BIA) with Industries and Enterprise Development Minister Sunil Handunneththi and Labour Minister and Finance Deputy Minister Dr. Anil Jayantha presiding over the opening of the new VAT counter.

The move is expected to boost tourist spending by offering tax rebates on qualifying purchases.

The refund mechanism allows eligible tourists to reclaim Value Added Tax (VAT) paid on qualified purchases during their stay in the country, subject to established documentation requirements and program guidelines. Tourists must be over 18, have a stay of fewer than 90 days, and present receipts for qualifying purchases exceeding Rs. 50,000 (excluding VAT) to be eligible.

The policy framework behind the relaunch was cleared by the President on 14 March, following submissions by the National Gem and Jewellery Authority (NGJA) together with the Industries Ministry. Speaking at the event, Handunneththi said the move would serve a dual purpose of stimulating local manufacturing and craft industries, while strengthening VAT compliance by channelling more high-value purchases through official registers.

He commended the NGJA for taking the initiative at the inaugural Export Development Council (EDCM) under the new Government, to address industry challenges and implementing the TVRS.

The reopening of the TVRS is seen as part of the broader efforts to enhance the appeal of Sri Lanka as a tourist shopping destination and improves compliance with tax policies through formal retail channels.

Representatives from the IRD, NGJA, and other Government agencies attended the event.

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