Sri Lanka’s Deputy Minister of Economic Development Nishantha Jayaweera has sought to clarify confusion over a 20.5% Value Added Tax (VAT) rate set to apply to banks and financial institutions from July 1, stressing that the move is not a tax increase but a consolidation of existing levies.
In a statement, Jayaweera said the new 20.5% VAT reflects the merging of the current 18% VAT and the 2.5% Social Security Contribution Levy (SSCL) into a single tax, in line with government efforts to simplify the tax structure.
He noted that under the revised system, financial institutions will no longer be required to pay the SSCL separately, nor submit separate tax filings, reducing administrative burdens.
The Deputy Minister rejected claims circulating on social media that VAT is being raised to 20.5%, describing such reports as misleading. (Newswire)
