Margin Matter

Jan 30, 2013 (LBO) - Sri Lankan suppliers of fuel to ships could be pushed out of business if a new tax is implemented, shipping officials and tax experts have warned. The trade has begun lobbying for the withdrawal of the five percent Ports and Airports Development Levy, (PAL) which they say could force them to raise prices which are already above rival bunkering centres, making them uncompetitive.

The PAL was to have come into effect in January but its implementation has been held back, they said.

Ralph Anandappa, chairman of the Ceylon Association of Ships’ Agents, said the levy on bunkering services could make them uncompetitive.

"We like to see PAL being withdrawn totally on bunker supplies to foreign ships," he told a forum organised by the KPMG tax firm and the Chartered Management Institute, a body for management professionals.

"Bunkering brings about 800 million rupees a year to the country of which 750 million rupees goes to the government and the rest to other stakeholders."

Anandappa warned that the imposition of PAL on bunkers would force suppliers to increase prices as margins were thin, making them uncompeti