VAT amendments approved by Cabinet

Cabinet has approved new amendments to the Value Added Tax (VAT) Bill. Accordingly, VAT will be increased by four percent to 15%.

The VAT increase will, among others, affect telecom services, tobacco products and powdered milk which contains added sugar or other sweetening matter. 

It will also affect air ticketing fees, with the 15% tax imposed on air passengers moving from an airport in Sri Lanka to an airport outside the country. 

Private medical services will also be hit by the VAT. However, diagnostic tests, dialysis and OPD services will be excluded.  

Meanwhile, the threshold on retail and wholesale trade has been increased to greater than Rs. 50 million per year (Rs.12.5 million per quarter). 

The Supreme Court in July, issued an interim order suspending the Government decision to impose the 15% VAT increase effective from May 2. The Court noted that the tax or levy could not be imposed without first obtaining Parliamentary approval. 

Accordingly, the Government noted that the VAT Bill will likely be gazetted either tonight or tomorrow morning, and it would be presented to Parliament at its next sitting. 

 

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