News
Exporters must pay VAT upfront
View(s):- Tax concessions could be claimed after earnings are brought back
By S. Rubatheesan
In keeping up with the International Monetary Fund’s requirements, exporters will be asked to pay Value Added Tax (VAT) upfront and claim their respective taxed funds after proceeds are brought back and declared in the country, according to a proposed bill.
Under the existing Simplified Value Added Tax Scheme, which the bill proposes to remove, exporters are given concessions where the state will bear the tax cost until the proceeds are declared voluntarily by the exporter.
The new bill, an amendment to the Value Added Tax Act, No. 14 of 2002, was published by President Ranil Wickremesinghe in his capacity as Minister of Finance, Economic Stabilisation and National Policies.
“Now the exporters have to pay the tax early on and claim the refund later. This will enable the government to increase its revenue,” the Inland Revenue Department’s Tax Policy Commissioner, A. M. Nafeel, told the Sunday Times while noting that the process might take a couple of months.
The move came weeks ahead of the first IMF review, which is scheduled to take place from September 14 to 27, on the performance of the Extended Fund Facility programme which Sri Lanka entered in March.
In the recent past, the government faced significant difficulties in bringing export proceeds into the country, particularly last year when the country experienced a severe forex shortage to finance basic requirements as exporters stashed away their proceeds outside the country.
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