Sri Lanka unveils plan to scrap para-tariffs

The government confirmed that the phased removal of para-tariffs will begin in 2028, following a comprehensive review of customs operations and revenue administration. Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando stated that this policy adjustment aims to balance trade facilitation with the protection of domestic manufacturers through a simplified four-band tariff structure of 0%, 10%, 20%, and 30%.

These reforms follow discussions with an International Monetary Fund delegation regarding the need for a more transparent and technology-driven revenue collection system. To minimise potential economic disruption, the government reached an agreement with local industries to adopt a slower transition for 107 specific items. For these products, the cess reduction will occur at a rate of 25% in 2028 and 2029, with the final 50% removed in 2030. Most other goods will see 50% of the cess eliminated in 2028, followed by 25% in 2029 and the remainder in 2030.

Beyond tariff adjustments, the administration prioritises the digitisation of clearance procedures to reduce physical interactions and prevent revenue leakages. Plans include the implementation of a new Customs Ordinance and the integration of advanced non-intrusive inspection scanners. This technology will allow customs officials to shift toward a risk-based screening strategy, prioritising the inspection of high-risk shipments while accelerating the processing of low-risk consignments.