The Tea Exporter’s Association (TEA) has complained of the high taxes imposed on the sector.
They lament that every exporter should renew their licence with the Tea Board (SLTB) annually at a cost of Rs. 500,000 for large and medium tea companies and Rs. 50,000 for small companies.
The CESS and Promotion Levy paid on export
of value added teas comes to Rs. 7.50 per kg and about Rs. 17.50 per kg on export of bulk tea.The income tax payment, economic service charge and other fees paid to SLTB and other state
organizations also add to the operational cost of tea exporters.
According to Sri Lanka Customs data over Rs. 2 billion per annum is collected from tea exporters as CESS on bulk and value added tea exports. A further Rs. 1 billion is collected as Tea Promotion Levy by SLTB from the exporters.
The total CESS and tea promotion levy paid by the exporters’ amount to around 1.5% of the annual tea exports revenue. “This may be the highest CESS payments made by the tea exporters in a tea producing country.”
The members of Tea Exporter’s Association point out that this happening at a time when tea production is on a declining trend in the last few years due to many issues.
The exporters are also worried about the slow implementation of budget proposals related to tea export sector. It has been proposed to abolish the Import and Export Control Department Fee of 1% of CIF value on import of tea for re-export purposes to support the tea industry through a more simplified tax and tariff structure in the 2017 Budget.
The Tea Exporter’s Association had been lobbying for removal of this fee as tea exporters pay a licence fee of Rs. 5.00 per kg to the Sri Lanka Tea Board also when importing tea for re-exports. The dual taxation on tea import licences currently applicable for the import of CTC,Green and Specialty teas is negatively affecting the competitiveness of Sri Lanka tea brands. “However, this proposal is yet to be implemented by the government.”
They also point out that Tea Fund since the establishment in November 2010 conducted only a few useful promotional activities have been undertaken in foreign markets and as a result the accumulation of the fund has now reached Rs 6 to 7 billion.
“We strongly believe that further accumulation of funds may prompt the Treasury to force the Tea Board to use the idling funds for recurrent expenditure or for other non-promotional activities”.
“The delay in implementation of the global Ceylon Tea campaign is not due to any fault of the tea exporters but due to strict government tender procedures and other regulations.”
In view of the current situation, TEA has requested SLTB to initiate action to suspend the tea promotion levy until the launch of Global Ceylon Tea Campaign is finalised.
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