As a leading provider of business consultancy and professional services, MRP Partners is committed to helping the textile and apparel industry adapt to major legislative changes. Effective April 1, 2026, the tax landscape for fabric in Sri Lanka has undergone a significant transformation.
The Shift from Zero-Rating to 18% VAT
Under new government orders, the previous zero-rated status for fabric imports has been rescinded. Additionally, the CESS levy previously imposed on certain fabric imports has been removed.
Key changes effective April 1, 2026:
- Importation: The importation of fabric is now liable to VAT at a rate of 18%.
- Local Supply: The supply of fabric in the local market is now liable to VAT at a rate of 18%.
Important Exemptions and Record-Keeping
There is a specific provision for stock imported prior to the change: the supply of fabric that was subject to a CESS levy before April 1, 2026, shall remain exempt from VAT. However, to qualify for this, businesses must maintain proper and separate records and documentation for these specific transactions.
The transition to an 18% VAT environment requires meticulous accounting. MRP Partners can help you restructure your record-keeping and tax strategies to ensure full compliance with these new regulations.
Partner with MRP Partners
Whether you are navigating new VAT rates on imports or ensuring your monthly returns are filed on time, MRP Partners is your dedicated ally in tax and business consultancy. We provide a full suite of services, from corporate secretarial tasks to complex tax planning, tailored to the Sri Lankan market.
Contact us today to secure your business’s financial future.
