The government’s proposed hike in Value Added Tax (VAT) to 18% from January 2024 will see the removal of elimination of almost all VAT exemptions other than for products relating to health, education, and a few essential foods, it was reported.
According to the Sunday Times, presenting the Budget 2024, President Ranil Wickremesinghe said this move will bring Sri Lanka in line with regional peers, including India and Pakistan, in terms of the standard VAT rate.
According to the Budget 2024, the following are certain items to which VAT would now be applied;
- Medical equipment, machinery, apparatus, accessories and parts thereof, hospital furniture, drugs and chemicals donated to a public hospital or the Health Ministry “for the provision of health services to address any pandemic or public health emergency”.
- Books, magazines, journals or periodicals (other than newspapers) for any period on or after November 11, 2016;
- Unused postage and revenue stamps of the government or provincial council;
- Public library services by the state, a provincial council or a local authority
- Media equipment or motorcycles recommended by the Media Secretary and approved by the subject Minister for use by media personnel;
- Raw materials for the manufacture of spectacles and spectacle frames;
- Items and spares for the poultry industry.
- Goods being brought for any international event approved by the Finance Ministry;
- Plants, fruit seeds;
- Electrical goods; cellular mobile phones, computers and computer accessories
- Hot air balloons;
- Machinery or accessories for renewable energy generation;
- A host of locally produced items such as dairy products and rice products, sugar, jewellery; software, briquettes and pallets using biomass waste, and locally manufactured hydropower or wind power machinery and equipment.
- Services provided by a person in Sri Lanka to another person outside Sri Lanka to be consumed or utilised by such other person outside Sri Lanka for which the payment is made in Sri Lanka rupees;
- Services of chartering of any vehicle;
- Services of receipts from reinsurance by any local insurance company by way of commission or compensation in an insurance business, and research and development services.
- Paintings will be liable to tax at the point of sale by the artist thereof.
- Services provided by the Department of Commerce, the Board of Investment and Sri Lanka Ports Authority (under certain categories);
- Services of hotel accommodation to any sportsman, organiser of any sports event or sponsor arriving in Sri Lanka to participate in any sports event or activity connected with sports, as may be approved by the Minister who is in charge of the subject of sports.
- Locally manufactured coconut milk
- Goods or services by any institution set up by the Ministry of Defence for the rehabilitation of disabled soldiers, insofar as the activities are carried out with the participation of such soldiers. (NewsWire)