June 22, 2017 (LBO) – Sri Lanka’s cabinet approval has been granted to postpone the abolition of SVAT system until the end of this year.
Accordingly, the SVAT abolition will take effect from 01 January 2018 after the necessary legislation is passed through Parliament.
This decision has been taken in order to give sufficient time period for exporters to adopt to the new system.
Initially, the SVAT system was to be abolished on 01 January 2017 as announced in Budget 2017.
It was subsequently postponed to 01 April 2017, following meetings the private sector had with the Prime Minster in early January.
The Ceylon Chamber together with other private sector stakeholders made strong submissions to the government to maintain the current SVAT system until a robust VAT refund mechanism is put in place.
Exporters said the decision to postpone the abolition of the SVAT system will reduce cash flow issues and increase competitiveness of exporters.
Amended draft Act on Value Added Tax will be published in the Gazette prior to being presented in the Parliament.