Aug 06, 2019 (LBO) – Sri Lanka’s Cabinet of Ministers has approved the tax amendments proposed by the Finance Minister Mangala Samaraweera in his Budget 2019.
Accordingly, the Cabinet has approved the Amendment Draft Bills on Nation Building Tax and Value Added Tax (VAT).
The Finance Ministry said all the amendments, once drafted by the legal draftsman will be presented to Parliament for approval in September.
Thus, the hotels, Guesthouse, Restaurants which are registered with the Tourist Board where they receive payment for such service in foreign currency through local commercial banks, such money will be exempted from Nation Building Tax.
This has aimed to strengthen the tourism industry. At the same time, importation of yachts and other vessels for pleasure or sports purposes will also be exempted from Nation Building Tax.
The exemption of NBT presently available for subcontractors in the construction industry sector will be made available to the main contractors too.
In addition, this tax concession will be given to the importers of unprocessed gems on the recommendation of the National Gem and Jewellery Authority.
The palm oil manufactured locally out of imported crude palm oil will also come under this exemption of NBT.
VAT Act will also be amended. VAT payment dates presently fall on 15th, 20 and last date of the month following each month of a taxable period is inconvenient for the taxpayers as well as the Tax administration.
Considering the request of the taxpayers, the VAT payment date will be changed to 20th day of the month following the month relevant to such payment.
The existing VAT on the supply of Condominium housing units has been amended.
Accordingly, VAT will not be charged from such housing projects which sell housing units that are sold not exceeding 25 million rupees each.
If a housing unit is provided by a Condominium which had obtained a compliance certificate from the relevant Local Government Authority or under an agreement of sale under the Notary Ordinance before the VAT Amendment Act was ratified, VAT will also not be charged for such property as well.
In addition, the locally produced Rice Bran oil manufactured out of locally produced red rice will also be exempted from VAT.
At the same time, as proposed by the Budget 2019, the existing VAT of 75 rupees per item of garments sold locally by BOI approved Apparel companies has been increased to 100 rupees per item.