The Cabinet of Ministers has approved a proposal to introduce two major reforms with regard to the Value Added Tax (VAT) in accordance with the comprehensive funding facility of the International Monitory Fund (IMF).
According to the government, as per the IMF requirement, removing most of the releases, the reformation of the Value Added Tax scheme, and cancellation of the Simplified Value Added Tax methodology should be applied.
Approximately 1.2% of the gross domestic product from the tax income can be increased by reactivating the logic of the existing release of VAT.
Accordingly, the Cabinet of Ministers granted approval to the resolution submitted by the Minister of Finance, Economic Stabilization and National Policies, President Ranil Wickremesinghe to remove most of the releases from Value Added Tax.
The resolution also proposes 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.
The resolution also proposes to revise the provisions applicable to the Value Added Tax Act so that the Simplified Value Added Tax methodology can be cancelled with effect from January 01, 2024, by introducing a more formal methodology for repaying the Value Added Tax.
The government added that instructions have been given to the Legal Draftsman to prepare a draft bill for the purpose. (NewsWire)
