Sri Lanka is seeking to raise Rs. 100 billion in revenue in 2016 by increasing the value added tax (VAT) and new taxes which came into effect from Monday (02), Finance Minister Ravi Karunanayake said. Sri Lanka’s revenue increased by 13.1% of GDP last year, compared with 11.5% in the previous year, mainly due to increased revenue from vehicle taxes. The government is however aiming for a 12.7% rise in tax revenue this year.
The amendments made to Value Added Tax (VAT) which raises VAT rate to 15% from 11% and the Nation Building Tax (NBT) has however exempted essential services including water, electricity, pharmaceuticals and education sectors, Minister Karunanayake said.
According to the Finance Ministry, import or supply of telecommunication equipment or machinery, high tech equipment including copper cables for telecom industry and the issue of licence to local telecom operators by Telecommunication Regulatory Commission are liable for the increased VAT.
The supply of goods or services to any specified project other than housing projects approved on or after May 5, 2016, will be taxed.
On the Nation Building Tax, while there is no change to the NBT rate which is at two percent, the limits subject to the tax and the fields which enjoy the freedom have been amended.
The threshold for VAT eligibility has been reduced to 12 million rupees taxable supplies annually, or three million rupees per quarter, the ministry said.