The Press Release dated 31.05.2022 was issued by the Media Division of Prime Minister’s Office setting out several proposals revising the VAT regime. A summary of salient features of such proposals is set out below:
| Current | Proposed | Effective Date |
|---|---|---|
| 1. Changes in Tax Rate | ||
| 8% | 12% | With immediate effect (i.e., 01.06.2022) |
| 2. Reduction of Threshold | ||
| LKR 300 Mn, p.a. or LKR 75 Mn, per quarter | LKR 120 Mn, p.a. | 01.10.2022 |
| 3. Removal of Exemptions | ||
| Exempt | Following exemptions to be removed: • Condominium Residential Apartments; • Certain unproductive exemptions based on economic benefits (specific details to be specified). |
01.10.2022 |
| 0% | Removal of 0% rate on supply of services by a hotel, guest house, restaurant or other similar businesses providing similar services, registered with the Sri Lanka Tourism Development Authority, if 60% of the total value of the inputs are sourced from local supplies/sources. Upon introduction, these will be subject to VAT at 12%. |
|