Proposed Tax Reforms Summary - Part 1 Value Added Tax ("VAT")
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Proposed Tax Reforms – Value Added Tax (“VAT”) In Sri Lanka
The Press Release dated 31.05.2022 was issued by THE Media Division of Prime Minister’s Office setting out several proposals revising the VAT regime. A summary of salient features of such proposals is set out below:
|
Current |
Proposed |
Effective Date |
|
1. Changes in Tax Rates |
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|
8% |
12% |
With immediate effect (i.e., 01.06.2022)
|
|
2. Reduction of Threshold |
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|
LKR 300 Mn, p.a. or LKR 75 Mn, per quarter
|
LKR 120 Mn, p.a. |
01.10.2022 |
|
3. Removal of Exemptions |
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|
Exempt
0% |
Following exemptions to be removed:
· Condominium Residential Apartments;
· Certain unproductive exemptions based on economic benefits (specific details to be specified).
Removal of 0% rate on supply of services by a hotel, guest house, restaurant or other similar businesses providing similar services, registered with the Sri Lanka Tourism Development Authority, if 60% of the total value of the inputs are sourced from local supplies/sources.
Upon introduction, these will be subject to VAT at 12%.
|
01.10.2022 |
