- Between Rs. 35 to 50 million loss as tax revenue to state coffers per day
- Imports of substandard goods rising
Local manufacturers are up in arms over the influx of low quality goods imported through popular e-commerce platforms which do not even have a local presence for returns and exchanges.
Industry representatives taking up cudgels to protect local industries from non taxpaying and cheap goods flooding the market called on the authorities to come up with a national policy governing all cross-border trading via e-commerce platforms and a clear and consistent tax policy for such imports.
The present situation is negatively impacting local businesses and prompting calls for regulatory action to address issues such as product quality, Customs procedures, and revenue collection.
Country Manager and Director of Aramex, Sanjay Samarasinghe queries as to how could Temu and Aliexpress are permitted to courier goods to Sri Lanka when they do not even have an office in Sri Lanka to return items that do not meet the standards of the customer.
Besides the flooding of sub standards goods in the country through e-commerce platforms industry leaders said the state loses a colossal amount as tax revenue to the tune of around Rs. 35 to 50 million daily.
Terming the practice as a fraud scheme, local manufacturers said that the ‘per kg clearance’ system permitted large scale commercial imports to the country bypassing taxes and creating an uneven playing field in the market.
Former President of the Sri Lanka Brands Association, P. Yasotharan said the permitting goods to be cleared based on weight instead of the real value and classification is an illegal practice that should be stopped.
He said goods are brought to the country by businessmen using the per kg system as business to consumer when they are actually business to business transactions to avoid taxes or pay less mounts in taxes.
Industry heads alleged that certain media outlets are funded by these foreign e-commerce channels to promote their corrupt practices.
Hot on the heels of the controversy the Government slapped an 18% Value Added Tax (VAT) on digital services provided by non-resident companies to local consumers, from October 1, 2025.
Tax experts said while the move aligns Sri Lanka with global best practices in taxing the digital economy and attempt to ensure a level playing field for local and international service providers, its implementation could run in to trouble as there is no mechanism for resolving issues with a non-resident entity lacking a physical presence when disputes over VAT calculation or compliance arises.
