Colombo: In a bid to boost revenue and protect local sugar factories, their employees, and sugarcane farmers, the Sri Lankan government is planning to begin exporting brown sugar produced locally, Industry and Entrepreneurship Development Minister Sunil Handunneththi announced, according to the local media in the country.
Speaking at a press conference held at the Government Information Department, the Minister explained that the move comes in response to financial challenges faced by the local sugar industry. He noted that the 18 percent VAT is charged on locally produced brown sugar as a IMF condition, whereas imported white sugar is VAT free.
The Minister said locally produced brown sugar costs Rs. 236 per kilo at the factory and added that imported white sugar only costs Rs. 132 per kilo at the Customs and Rs. 50 as tax is imposed. But no VAT is imposed.
He said the Ministry made several requests from the Finance Ministry to get the VAT reduced but it was not possible due to IMF conditions, reports Daily Mirror Online.
To address the revenue gap, the Ministry is now considering export as a practical solution. According to Handunneththi, local brown sugar is more organic due to reduced use of fertilisers in sugarcane farming. This gives the product an edge in international markets seeking healthier and more natural alternatives.
“We’ve held discussions with several countries interested in importing our sugar as a high-quality organic product. It’s unfortunate that we must export our healthier sugar while importing cheaper, less healthy white sugar, but we have to take this step to keep the industry afloat,” the Minister said.
He stressed that the goal is to stabilize the sector and eventually lower prices for consumers in the domestic market once financial conditions improve and VAT policies can be adjusted.
