No VAT on apartments; Decision deferred to April 2019
View(s):The 15 per cent value added tax (VAT) on sales of apartments from projects after April 1 won’t be effected from April 1, as planned earlier, officials said.
“The Treasury differed this tax for a year and it will be effected from April 2019,” Finance Minister Mangala Samaraweera confirmed at a media conference on Monday.
This VAT was in effect a few years earlier and was removed in the 2015 budget. This is mainly since the amending legislation to enable this process hasn’t been presented to parliament as yet, the Business Times learns.
Earlier the Treasury promised Condominium Developers Association of Sri Lanka (CDASL), in response to a letter in January by the CDASL, to price the condominium housing VAT on apartment projects after April. They opposed the proposal to impose a 15 per cent VAT on the sale of condominium housing units from April 2018, which was presented in the budget. CDASL members said that whilst they are aware of the need for bigger revenue to the Government and the intent to abolish selective exemptions, they are of the view that the re-imposition of VAT on the sale of condominium housing projects which have already started construction and sales will be counterproductive and cause a serious negative impact on the industry. Before the start of this month the buyers were scrambling to make the most of it.
A major developer told the Business Times that March was the month they expected the highest sales. Another builder agreed saying his sales increased at a considerable rate. “Many are buying at an increasing rate.” He said that most were bought by doctors and engineers, also entrepreneurs and those working abroad earning a good income.
A third builder added that their apartment sales are mostly generated from the diaspora. “We see that 30 per cent sales are from the diaspora and less than 10 per cent are foreign buyers.”
| Surge in sales | |
| While the tax debate was on, certain apartment buyers told the Business Times that builders were trying to ‘make hay while the sun shines’ last month when some had hiked their condo prices in anticipation of the sharp rise in sales owing to the anticipated value added tax. “There was an ad that was posted on March 3 for an apartment for Rs. 22.8 million on the Internet but by March 30 for the same property they were quoting Rs. 25 million,” an interested buyer told the Business Times. She added, “It looks like they have increased the rates over the last few days because of the VAT increase, as they know customers are purchasing before 1st April.” She also added that after April 1 these builders will advertise or sell saying they are absorbing the VAT cost. |