The government announced it will remove VAT on milk foods and gas to reduce the cost of living but increased VAT on other items without announcing it. The government announced it will remove VAT on milk foods and gas to reduce the cost of living but increased VAT on other items without announcing it. “To address the cost of living, Cabinet decided to exempt milk foods and liquid petroleum gas from VAT,” said Cabinet Spokesperson Nimal Siripala de Silva on Thursday.
However, on Wednesday, local importers woke up to find that VAT on the government’s list of luxury items had gone up by two percent, pushing it from an already high 18 percent to 20 percent, without any prior warnings.
When the latest VAT exemption will trickle down to consumers is also still unclear.
“The decision to exempt VAT was approved by Cabinet but it must be confirmed at the next Cabinet meeting and then it must be gazetted,” said de Silva.
At the moment Sri Lankan consumers pay 15 percent VAT on gas, but VAT on milk foods is only 5 percent and infant milk foods and liquid milk is already exempt from VAT.
In July the government removed the