Paper board duty racket bared

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By 2017-12-07

By Ravi Ladduwahetty

A company based in Colombo 12 has been flouting Customs regulations and importing paper boards regularly for a number of years under the TIEP scheme and their value added re-export component was questionable. Customs sources said this racket has been going on for quite awhile.

The paper is imported from Indonesia and no value addition is made and not re-exported, instead it finds its way into the local market thus flouting the duty waiver.

The Temporary Importation for Export Processing (TIEP) scheme, where the benefit to the importer is 45% on CIF value. By carrying out this questionable act, it has disturbed the regulated business environment for paper and boards in Sri Lanka.
Industry sources told Ceylon FT that Sri Lanka does not produce paper boards for the Printing, Packaging and Publishing Sectors to comply with different percentage of Duties and Value Added Tax. Instead of adding value to paper and laser boards for re-export, the importer is using the TIEP scheme for local distribution, which is a gross violation of the conditions that the benefit was meant for, these sources said.

It is alleged that the importer was using the Custom's TIEP registered entities to its advantage by manipulating the Customs and the market in an effort to fraudulently clear as Duty and Value Added Tax scheme for imports instead of re-exporting - the purpose for which concessions were meant.

It has also been found that these products were freely available in the local market and the loss to the Government in terms of revenue is 45% of the price value.

The purpose of the TIEP scheme is for local value addition and re-export of finished goods. Unfortunately, certain importers were misusing the system to their advantage and creating a market imbalance for the Printing, Publishing and Packaging Sector which is a broad Sector in Sri Lanka. Further, all products imported under the TIEP scheme are entitled to a 45% tax exemption, industry sources said and added that this was a clear violation of the tax exemption set out by Customs.

Importers who comply with the Custom's norms have made several complaints to the Authorities that such goods were being freely distributed in the local market at competitive prices.



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