• Plan would exempt B2C e-commerce imports under de minimis rule or apply flat rate
• B2B shipments to continue paying tax by HS code
• Trade Min. cites need to protect local industry; Customs says current law lacks de minimis provision

A proposal is underway to differentiate between Business-to-Consumer (B2C) and Business-to-Business (B2B) e-commerce imports, whereby B2C shipments would benefit from zero tariffs under the de minimis rule or be subject to a standardised flat rate based on their impact on local industries. 

Speaking to The Sunday Morning Business, Ministry of Trade, Commerce, Food Security, and Cooperative Development Secretary K.A. Vimalenthirarajah stated that, in response to the prevailing disruption at Sri Lanka Customs caused by the recent implementation of item-specific taxation based on Harmonised System (HS) codes for all e-commerce imports, a proposal had been put forward with respect to B2C e-commerce imports. 

This proposal will either exempt B2C e-commerce consignments from all applicable taxes under the de minimis rule or apply a uniform flat rate where the imported goods are deemed to have an impact on domestic industries.

“We are going to see whether it is for personal usage or for commercial purposes. If it is for personal usage, it will be considered and wherever possible, there will be no duty. If it is impacting a local industry, there may be some sort of flat rate,” Vimalenthirarajah stated.

He noted that the flat rate would be set by the Ministry of Finance.

In contrast, all individual items within e-commerce consignments imported for B2B purposes will be subject to taxation based on their respective HS codes.

Vimalenthirarajah defended the distinction by asserting that local businesses dependent on e-commerce imports had a well-established tendency to withhold the benefits of duty-free concessions to end consumers.

Speaking to The Sunday Morning Business, Sri Lanka Customs Media Spokesperson and Additional Director General Seevali Arukgoda stated that the de minimis rule was not recognised in terms of local laws and regulations, and that therefore, Customs was currently imposing import tax on individual items within e-commerce consignments based on their respective HS codes.

“No one has asked us to impose tax based on HS codes; that is what we are supposed to do. We are supposed to tax based on HS codes, so that is exactly what we are doing,” he stated.

The de minimis principle refers to the exemption of small or low-value import consignments from Customs duties, a practice widely recognised and implemented by customs authorities across the globe.