Finance Ministry says reviewing VAT exemptions

24 December 2022 06:52 am - 6 - {{hitsCtrl.values.hits}}

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The government is in the midst of reviewing the Value Added Tax (VAT) exemptions granted to various products and services, in order to eliminate the unproductive tax exemptions, with a view to boost tax revenue by improving tax capacity and performance. “At this juncture, we are reviewing the VAT exemptions granted to various sectors, in order to remove unproductive tax exemptions,” Fiscal Policy Department Director General Dr. Kapila Senanayake said.

He was speaking at a tax seminar held at the Finance Ministry in Colombo yesterday.

The government increased the VAT rate to 15 percent, with effect from September 1, this year and removed the VAT exemption granted for condominium residential accommodations from January 1, next year.

Citing the World Bank data, Dr. Senanayake pointed out that there was a wide gap of around 6 percent of GDP between the VAT capacity and performance.

According to PwC Sri Lanka Chief Executive Officer Sujeewa Mudalige, the government could collect at least Rs.200 billion by removing the current VAT exemptions granted to various products and services.

Sri Lanka has granted VAT exemptions for a range of products and services, including locally produced dairy, electronic items, mobile phones, sea sand and unprocessed prawns. JB Securities Limited Managing Director and Advocata Institute Chairman Murtaza Jafferjee opined that VAT exemptions not only deprive the state coffers but also certain VAT exemptions have led to distortions in the market.

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Comments - 6

Nightowl Saturday, 24 December 2022 12:05 PM

Funny that comment from doomsday sayer only published.

Neville Jayakody Saturday, 24 December 2022 02:55 PM

Who will benefit from removing VAT exemption from locally produced diary products? Who initiated to have it removed? Bundle it with others and no one will notice!

Lokka Saturday, 24 December 2022 04:12 PM

Whatever is taxed, don't tax the patients when they consult doctors, their hospitalization charges, and medicines.

Alpha Sunday, 25 December 2022 01:08 PM

This is the way to go. Remove Income Tax and implement VAT and Expenditure Tax. This way everybody will work hard to increase their incomes. This will be good for the economy. They will pay only when they spend and nobody can avoid or evade this tax. Everybody will pay. And no complicated tax returns and no IRD official to bribe.

Gehan Sunday, 25 December 2022 10:12 PM

Then the cash/black economy will boom

Alpha Monday, 26 December 2022 05:49 PM

Black economy is when people do not declare their incomes. When income declaration is not required, then black economy is no longer possible.

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Finance Ministry says reviewing VAT exemptions

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