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Government is likely to lose up to Rs.
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7 billion in VAT collections after the Cabinet decided to remove the tax from diesel imports.
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Government is likely to lose up to Rs. 7 billion in VAT collections after the Cabinet decided to remove the tax from diesel imports. The VAT removal legitimizes the Treasury policy towards the Ceylon Petroleum Corporation (CPC) that has focused on netting off petroleum subsidies for VAT and excise duty collection.
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Lanka IOC (LIOC), the other player in down stream petroleum marketing here, is also likely to get the tax benefit instead of the subsidy.

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Government still owes over US$ 100 million in overdue subsidies to the CPC and LIOC.

The US$ 60 million (Rs. 6 billion) owed to the State owned CPC is likely to be set off against VAT and excise levy collectable for the period.

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Cabinet’s decision to slash VAT from diesel is due to be implemented immediately - although the Finance Ministry said the official communication from the Cabinet Secretary had not arrived by Friday, July 22.

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Finance Ministry will inform Inland Revenue of the decision when it receives confirmation.

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