Tariff Overhaul: Sri Lanka Begins Consultations on Four-Band Policy 📈

The Government of Sri Lanka has officially commenced stakeholder engagements to implement the 2026 Budget proposals for a significant tariff system overhaul. The initiative aims to align the domestic economy with global value chains and boost competitiveness. • Key Reform Pillars The reform introduces a simplified Four-Band Tariff Policy with standard Customs Import Duty (CID) rates of 0%, 10%, 20%, and 30%. This replaces the current complex structure to ensure international consistency and transparency. • Phase-out of Para-tariffs A major highlight is the planned removal of para-tariffs, specifically Cess and the Port and Airport Development Levy (PAL). This move is intended to reduce the "anti-export bias" and lower production costs for domestic manufacturers. • Sectoral Impact & Standards • Apparel & Textiles: Proposed removal of the Rs. 100/kg Cess on imported fabric, replacing it with VAT to create a level playing field for local producers. • Agriculture: Imported coconut and palm oil will shift from a Special Commodity Levy (SCL) to the standard VAT/SSCL framework. • ICT/BPM & Manufacturing: Simplified import procedures for capital goods and raw materials are expected to facilitate trade and technological integration. • Global Alignment The new structure follows the United Nations Broad Economic Classification (BEC) Revision 5. Technical guidance is being provided by the World Bank to ensure the transition supports fiscal sustainability and export diversification. _Note: Reforms are primarily slated for implementation by April 2026 based on provisional budget timelines._