General
Sri Lanka rupee closes at 323.90/324.00 to the US dollar
ECONOMYNEXT – The government is implementing measures to mitigate the effects of the VAT amendment,” Tax Policy Adviser at the Ministry of Finance, Thanuja Perera said at press conference held at the Presidential Media Centre (PMC) on Thursday (28).
“This involves the elimination of additional taxes on goods and services under VAT and implementing necessary tax adjustments,” Perera was quoted as saying in the PMD statement.
Perera said that even individuals with expertise in economics are circulating a misconception, suggesting that family monthly expenses will increase by an additional Rs 40,000 post the VAT implementation on January 1.
“While there will be some additional expenses resulting from the tax reform, they may not be as significant as some are suggesting.”
She pointed out that about 90 types of items, including educational services, electricity, health, medicine, passenger transportation, vegetables and fruits, are exempt from VAT.
VAT does not apply to 65 types of items subject to the Special Commodity Levy.
“It is challenging for us to continue relying on concessions. It must be emphasized that this tax amendment has been implemented to address the crucial matter of increasing state income.”
The Value Added Tax (VAT) was initially introduced in Sri Lanka two decades ago, through Act No. 14 of 2002.
The VAT rate underwent various changes and was reduced to 8% in 2019, resulting in a significant decline in state income. Subsequently, it was raised to 15%.
The VAT Amendment Act, presented to Parliament last month, further increases the VAT from 15% to 18%, effective January 1, 2024.
The new amendment eliminates numerous tax exemptions, aiming to recover substantial revenue lost by the government. (Colombo/Dec29/2023)
