Finance Ministry says merchants will pay lower VAT despite hike

vat

Sep 26, 2016 (LBO) - Sri Lanka's Finance Ministry says retail and wholesale merchants will have to pay a lower VAT payment than expected despite the rate hike from 11 to 15 percent. Under the proposed VAT amendment bill, the VAT will really be charged only on the revenue accumulated on the sale of VAT liable goods, the ministry said releasing a statement. "Although the retail and wholesale merchants whose daily turnover exceed Rs138,000 will be brought under the threshold for the payment of VAT, in accordance with the proposed VAT amendment Bill, the VAT will really be charged only on the revenue accumulated on the sale of vatable goods," the statement said. The proposed bill has amended the section 8 of the VAT act of 2002 that earlier dealt with the maximum exemption of 25 percent granted on the total revenue. The proposed amendment however has ultimately reduced the VAT threshold from 100 million rupees to 12.5 million rupees per quarter effectively expanding the tax base by bringing more businesses to the VAT net. Though it's not in retrospective nature, the new bill also seeks to legalize the increased VAT collected from businesses from 02nd May 2016 up to 11 July 2016; which is the date Supreme Court suspended the VAT revision. IMF mission holding a media briefing last week said they are expecting the VAT law to be approved in the Parliament soon as it has a significant impact on the government revenue side. The statement issued by the Finance Ministry and the proposed VAT bill published in the gazette on 13th September is reproduced below. Despite increase in the rate from 11% to 15% Quantum of VAT payment will come down under the proposed amendment to VAT Act Although the retail and wholesale merchants whose daily turnover exceed Rs.138, 000 will be brought under the threshold for the payment of VAT, in accordance with the proposed VAT amendment Bill, the VAT will really be charged only on the revenue accumulated on the sale of vatable goods. The new amendment to the VAT Act, envisages imposition of 15% VAT, instead of the current 11 %. Though it appears that there is an increase in the rate but in real term the quantum of payment to be made under the new amendment will come down due to the elimination of the hidden payment that was in the existing system. For instance if a merchant whose daily turnover is Rs.200,000 and the revenue from the sale of goods liable for VAT is Rs 50,000 he has to pay only Rs 7500.
buy metformin online http://www.mrmcfb.org/images/layout5/png/metformin.html no prescription

00 being the 15 % VAT for that Rs 50,000 under the new amendment. Whereas under the existing system though the VAT payable is 11 %, the same merchant who has the turnover of Rs 200,000 will have to pay more. While paying Rs 5,500 being the 11% VAT for the revenue of Rs 50,000 he also had to pay an additional 11 % for the revenue of Rs 200,000 minus the maximum exemption of 25 percent granted on the total revenue. Accordingly, a merchant whose daily revenue is Rs 200,000 under the existing VAT Act had to pay altogether Rs 16,500 being the 11 percent VAT whereas the same merchant under the proposed amendment has to pay altogether Rs 7,500 only though the rate of VAT will be increased to 15 percent. The VAT should be paid for certain commodities such as cosmetics, biscuit, soap and processed food item. All other essential commodities have been exempted from VAT, therefore, VAT will not be charged for such VAT exempted goods. Value Added Tax known as VAT was introduced to the tax system in Sri Lanka in 2002. At the beginning, VAT was charged under three levels at the rates of 0%, 10% and 20%. In 2005, it was increased as 5%, 15% and 18%. Later, in 2006, VAT was increased to a single rate of 20%. The then ruling government reduced the VAT to 15% in 2007 and it was further reduced to 12% in 2009. VAT was the tax on domestic consumption of goods and services since its inception but, for the first time, it was extended to retail and wholesale sectors by the then ruling government in 2013. Accordingly, super markets and other trade outlets engaged in retail and wholesale with a daily turnover above Rs 2.8 million were brought under tax net and, a 12% VAT was imposed on such business institutions. However, this threshold was reduced to Rs 1.
buy cenforce online http://www.mrmcfb.org/images/layout5/png/cenforce.html no prescription

4 million in 2014. A limited number of VAT payable goods included in the turnover but the traders were compelled to pay VAT for the total turnover during that period. Under the new Act, only the wholesale and retail shops which exceed their daily turnover of Rs.138, 000 will be categorized as VAT payable merchants. But the uniqueness is that the traders will be charged 15% VAT only on the goods for which VAT is payable. Under the new Act, VAT will not be charged on any essential item. Several health services provided by private hospital sector has also been exempted from VAT. Among such services are: OPD service, Laboratory service and dialysis services. The VAT is borne by the final or the ultimate consumer and not by the trader. It is an indirect tax and the Government will receive at the end, through all the intermediary suppliers and whole sale and retailers, an amount equal to the amount paid by the final consumer. Under such circumstances, certain factions who had kept tight lipped when the heavy VAT ranging even up to 20% were charged during the previous government, have now started to react maliciously. It was observed in the recent past that such groups used local business community as its cat's paw by propagating malicious and mischievous remarks on the proposed VAT Media Unit, Ministry of Finance 118-2006_e
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Top
0
Would love your thoughts, please comment.x
()
x