Cabinet decision on VAT & SVAT

Sri Lanka's Cabinet of Ministers reached a decision on the rationalization of Value Added Tax Exemptions and Abolition of Simplified Value Added Tax system.

Two major reformations in regard to the Value Added Tax (VAT) should be introduced according to the comprehensive funding facility of the International Monitory Fund. 

Under that, removing most of the exemptions, the reformation of the Value Added Tax (VAT) scheme and cancellation of the Simplified Value Added Tax (SVAT) methodology should be applied, said the Department of Government Information.

Approximately 1.2% of the gross domestic product from the tax income can be increased by reactivating the logic of the existing release of Value Added Tax (VAT). 

Accordingly, the Cabinet of Ministers granted concurrence to the resolution forwarded by the Minister of Finance, Economic Stabilization and National Policies to remove most of the releases from Value Added Tax (VAT), further retaining releases that ease the pressure on low - income families to secure the fundamental sectors of the economy as well as the releases for sectors such as education, health and agriculture, as well as to revise the provisions applicable for the Value Added Tax (VAT) act so that the Simplified Value Added Tax (SVAT) methodology can be canceled with effect from 01.01.2024 by introducing a more formal methodology for repaying the Value Added Tax (VAT) and to instruct the Legal Draftsman to prepare a draft bill for the purpose.