INSUBCONTINENT EXCLUSIVE:
The government has decided to increase the Value Added Tax (VAT) and the Telecommunications Levy as an immediate measure, the Prime
Acts including the Inland Revenue Act No
24 OF 2017, Value Added Tax Act, No
14 of 2002, Telecommunication Levy Act No21 of 2011, Betting and Gaming Levy Act, No.40 of 1988 and the Fiscal Management (Responsibility)
3 of 2003, with a view to increasing government revenue.After the government introduced a relaxed tax policy in late 2019 to reduce the
rates of VAT, personal income tax, corporate income tax and to shrink the tax base on VAT and income tax, its revenue dropped by nearly Rs
800 billion.In this context, the Cabinet of Ministers green-lighted the proposal presented by Prime Minister Ranil Wickremesinghe in his
capacity as the Minister of Finance, Economic Stabilization, and National Policies to instruct the legal draftsmen to prepare the necessary
Bills to amend the aforementioned Acts.The government had reduced the VAT from 15% to 8% effective from December 01, 2019, and increased the
limit for registration for VAT from Rs
12 million per year to Rs
75 million per quarter/Rs
With the adverse effects of the Covid-19 pandemic and the aforementioned amendments, the VAT revenue decreased from Rs
443.9 billion in 2019 to Rs
233.8 in 2020, by 47%.Therefore, the Value-Added Tax will be increased from 8% to 12%
300 million per year to Rs
120 million per year.Meanwhile, the Telecommunications Levy will be raised from 11.25% to 15%
revenue from the Telecommunications Tax dropped to Rs
13.1 billion in 2022 from Rs
18.3 billion in 2019 as a result of the tax cut introduced on December 01, 2019
The government had slashed the Telecommunications Tax to 11.25% from 15%.Refer to the attachments below to read more on the tax revisions
This article first appeared/also appeared in https://adaderana.lk
