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:
|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).
|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%.