Sri Lanka reverses decision to increase domestic tax on Pakistani kinnow

Moreover, the country's citrus season had just commenced, and the increase in cess had placed existing export orders in jeopardy.

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The Sri Lankan government has reversed its decision to increase the domestic tax on imported mandarins, including kinnows.

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Sri Lanka had last month announced a sudden increase in domestic tax on imported mandarins from LKR30/kg to LKR160/kg, which had made kinnow export from Pakistan almost four times costlier than before.

Although the tax was imposed on all imported kinnows, the move significantly affected Pakistan, as the kinnow is a concessional item under the Pakistan-Sri Lanka Free Trade Agreement (PSFTA).

Moreover, the country’s citrus season had just commenced, and the increase in cess had placed existing export orders in jeopardy.

The Pakistan Fruits & Vegetables Association (PFVA) had also expressed concerns over the tax increase and had requested the Sri Lankan government for intervention in this regard.

Officials said that the Ministry of Commerce (MoC), via its Trade & Investment Attaché, Asma Kamal, in Colombo, immediately took up the matter with the concerned authorities in Sri Lanka to reach an amicable resolution on the issue.

It is expected that this reversal in tax would support Pakistani kinnow exporters amid challenging circumstances in the wake of the Covid-19 pandemic, they added.

Appreciating the Sri Lankan government’s move, the PFVA opined that the withdrawal of taxes would ultimately help Pakistan meet its kinnow export target of 350,000 tonnes this year.

Waheed Ahmed, the PFVA’s head, lauded the role played by the MoC, especially Adviser to Prime Minister on Commerce Abdul Razzaq Dawood, as well as the efforts of the trade and investment attaché appointed in Sri Lanka, who effectively raised the matter in front of the Sri Lankan authorities.

The PFVA had identified the issue of Sri Lanka increasing the cess on kinnow on November 30.

According to the Ministry of Commerce officials, Pakistan has been a leading and steady supplier of quality mandarins to the Sri Lankan market in recent years.

It may be noted that the kinnow exporters aim to fetch foreign exchange worth $210 million this season with the export of additional 50,000 metric tonnes (MT) to meet the set target of 350,000MT this season.

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