The Simplified Value Added Tax (SVAT) scheme will be abolished on January 1, 2018, subject to parliamentary approval, according to a decision taken by the Cabinet of Ministers.
Finance and Mass Media Minister Mangala Samaraweera has presented an amended Value Added Tax Bill to the cabinet, which will legislate the removal of the SVAT once passed in parliament.
The SVAT abolishment was originally scheduled to become effective from April 1, 2017.
Exporters have been pushing for the SVAT scheme to be retained until the electronic tax portal (RAMIS), which can instantaneously process taxes, becomes reliably operational, since claiming VAT refunds under the normal scheme causes delays, which in turn threatens company cash flows.
Former Finance Minister Ravi Karunanayake had said that small firms were fraudulently utilizing the SVAT system and that the SVAT system will become defunct once RAMIS comes online on January 1, 2017. However, the RAMIS system is not yet fully operational.