Nov 08, 2012 (LBO) – Sri Lanka has extended value added tax to the retail trade starting with supermarkets with a turnover above 500 million rupees a quarter, President Mahinda Rajapaksa said presenting a budget for 2012. Supplies made by the Central Bank, some services of public corporations have also been exempted from tax.
A regime that was in office until 2004 also reduced tax transparency by changing the VAT law to hide the tax from ordinary citizens who were not registered to recover it.
There have also been high profile value added tax frauds involving claims based on inflated export values.
But Sri Lanka’s inland revenue office had started co-ordinating with customs authorities to assess import volumes match reported exports. A so-called SVAT scheme has also been started to give credit for tax paid at the point of import instead of a refund.
A so-called non recoverable nation building tax will also be charged from supermarkets.
The state is expecting to raise 5.2 billion rupees from the tax in 2013.
Value added tax is expected to be a neutral simple tax with minimal exemptions and exports to be zero rated so that citizens only pay a part (usually about 20 percent) of the value added