VAT goes up to 15 pct, threshold reduced: Finance Ministry

Finance-ministry

May 03, 2016 (LBO) – Sri Lanka’s Value Added Tax (VAT) will be revised up to 15 percent from 11 percent from May 2nd, with pharmaceuticals and education sectors being exempt, the Finance Ministry said.

The Wholesale and Retail trade will be eligible for this taxation, although several items are exempted.

The threshold for VAT eligibility has been reduced to 12 million rupees taxable supplies annually, or three million rupees per quarter, the ministry said.

The following exemptions are removed and liable for VAT with effect from May 2, 2016.

– Supply of telecommunication services
– Import or supply of telecom equipment or machinery, high-tech equipment including copper cables for telecom industry.
– The issue of licenses to local telecom operators by TRC
– Supply of healthcare services
– The supply of goods or services to any specified project approved on or after 02.05.2016 other than housing projects.

The Nation Building Tax (NBT) will remain at 2 percent, despite a previous proposal to double it.

However, eligibility for payment will be lowered to three million rupees of turnover per quarter from 3.75 million rupees per quarter previously.

The ministry said the business activities for NBT includes operating a hotel, guest house, restaurant or other similar business, providing educational services locally and supply of labour.

The following exemptions are removed and liable for NBT with effect from May 02, 2016:
– Telecommunication Service
– Supply of electricity (including the supply to the national grid)
– Lubricants (petroleum and petroleum products other than petrol, diesel or kerosene)
– The supply of goods or services to any specified project approved on or after 02.05.2016 other than housing projects.

Finance Minister Ravi Karunanayake said in the statement that the revisions have been done so as to not impact essential items and services.

Meanwhile, the Share Transaction Levy have been re-imposed with effect from 01.04.2016 at the rate of 0.3 percent from every buyer and seller, on the turnover of every share trading transaction, which is conducted through a Stock Exchange.

The list notices from the ministry are below:

VAT-Excempted-Goods-and-Services

Notice of the Inland Revenue Department.

VATNBT02052016_E