ECONOMYNEXT – Sri Lanka’s former Finance Minister Mangala Samaraweera had set a 50 dollar limit for tax free (de-minimis) online purchases from abroad, but it is not being implemented properly, opposition legislator Harsha de Silva said.
The current crisis emerged after Customs ended a de facto practice of charging for parcels by weight and they started to charge by HS Code from May. There are allegations that some businesses also used the system to bring large volume consignments for re-sale.
A ‘de-minimis’ limit is used for small parcels sent to individuals, in many countries with values ranging from around 150 dollars (Europe and East Asia) to 800 dollars (US).
Sri Lanka seemed not to have implemented de minimis apparently for two reasons, de Silva told.
One reason appears to be that the 50 dollar limit has been interpreted to apply to an entire package coming from abroad, where goods destined to many individuals are consolidated together to save freight.
“When Mangala Samaraweera put the 50 dollar limit it was intended to apply to only one item of one person,” de Silva said.
“It was not intended to apply to consolidated shipments.”
The second reason for the blockage was that to input HS Code based declarations to the Customs system, every individual’s TIN number was required.
“That is not practical,” de Silva said.”No where in the world is de minimis applied like this.”
“Sri Lanka has to decide whether to use de minimis or not,” de Silva told parliament. “If not, what is your alternative?
One option is to allow small parcels tax free. Another option was to charge a small tax, like 5 percent, 10 percent or 15 percent.
“If it is higher than the threshold, you can charge the tax as a commercial item. If you like you can use Mangala Samaraweera’s 50 dollar limit.”
European nations charge VAT on de-minimis imports but not import duties. The VAT is charged before shipping cost.
The free limit may depend on how much economic freedom the people have won and how the state values the worth of individual citizens (consumer sovereignty) over the power of domestic producers with political clout who want to oppress them with protectionism, analysts say.
In countries with economic freedoms people are richer and they are used to buying higher value goods unlike in countries which are poor in part due to trade controls, monetary instability and bad policies.
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Meanwhile de Silva said some platforms had also made investments domestically. Platforms with local presence can be given an extra benefit, he said.
Decisions also had to be made how to collect the tax and there was guidance on how other countries do it.
“There, pre-declaration is essential,” de Silva said. “After the goods arrive, they are given 4 hours to fill the documents. That cannot be done.”
The ASYCUDA platform of Sri Lanka Customs was also crashing when large volumes were input, he said.
Sri Lanka had to integrate with the world, de Silva said. It was not possible to progress by building walls around the country, he said. (Colombo/July09/2025)
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