The government has underscored the advantages available to Small and Medium-sized Enterprises (SMEs) that voluntarily register for Value Added Tax (VAT), even if their annual turnover is below the Rs. 60 million threshold.
Deputy Minister of Economic Development Nishantha Jayaweera, speaking to the media, said VAT-registered SMEs, particularly manufacturers, can claim input VAT on raw materials and certain services.
He noted that such businesses can also expand by attracting customers who prefer dealing with suppliers that issue VAT invoices.
“By registering, SMEs not only benefit from input VAT but also attract more customers, as buyers prefer to deal with traders who issue VAT invoices,” he said.
The Deputy Minister added that businesses are allowed to register for VAT voluntarily, regardless of turnover, and that this option strengthens competitiveness and supports SME expansion.
Jayaweera further explained that the government’s decision to keep the VAT threshold unchanged at Rs. 60 million, instead of reducing it to Rs. 36 million, was taken after considering the economic impact of Cyclone Ditwah last year and the Middle East crisis, which drove up fuel costs and commodity prices.
He stressed that while the move protects smaller businesses from additional tax burdens, voluntary VAT registration remains a strategic pathway for SMEs to grow and integrate more effectively into the formal economy. (Newswire)