Inland Revenue Department relieves 54,000 businesses from VAT

COLOMBO (News 1st) - The Inland Revenue Department has relived nearly 54,000 businesses from paying Value Added Tax. This was notified through the Inactive VAT List, published by the department yesterday. Such inactivated persons are not permitted to collect VAT on the supplies made on or after January 01, 2020. Further, they are required to surrender their VAT Registration Certificate to the Inland Revenue Department. The measure comes after the newly elected government announced several tax concessions, including a slash in Value Added Tax. Accordingly, the VAT rate was revised to 8% from a previous 15%, with effect from 1st December 2019. However, the VAT applicable to financial services remains at 15%. With effect from January 2020, the liability limit for registration of VAT was increased to Rs.300 mn from Rs.12 mn per annum. With effect 1st January 2020, the Pay As You Earn threshold was increased to Rs.250,000 from Rs.100,000 per month. With effect from 1st January 2020, Personal Income Tax will only be applicable to those who earn an income of more than Rs.3,000,000 per annum. The first Rs.3,000,000 will be exempt from taxes, the next income slab of Rs.250,000 will be charged 6%, the second slab of Rs.250,000 will be charged at 12%, while the balance will be charged at 18%. Owing to the recently introduced tax concessions, the Finance Ministry expects a revenue loss of approximately Rs.450 - Rs.500bn during 2020.