Nov 27, 2019 (LBO) – Sri Lanka's new Cabinet of Ministers has given its approval to reduce Value Added Tax (VAT) and various other taxes, Co-Cabinet Spokesperson Minister Bandula Gunawardana said.
“Required amendments and gazette notifications are currently being prepared,” Gunawardana told reporters.
“This will be a stimulus to all areas of the economy and it will allow us to widen the current tax base as well. We need to increase the non-tax revenue in the future."
Accordingly, the current VAT rate of 15 percent and 2 percent of NBT will be collectively reduced to 8 percent. The new VAT rate will be applicable from the next month.
The Tax-free threshold for VAT has also been raised to 25 million rupees turnover per month from the existing one million rupees.
The VAT on banking, financial services and insurance to be maintained at 15 percent and the income from agriculture, fishing & livestock to be made income tax free.
Capital Gains Tax, VAT on condominiums, Nation Building Tax on domestic production, Economic Service Charge, Bank Debit Tax, Pay as You Earn Tax and Withholding Tax on interest has been removed.
The Cabinet has also decided to reduce the telecommunications levy by 25 percent and the income tax on the construction industry from 28 percent to 14 percent.
The Cabinet announced that all religious places are exempted from taxes. Workers' remittances have also been exempted from income tax. IT and enabling services to be made tax free.
Tourism business will be treated as export for zero rates provided that 60 percent of the turnover is sourced from local suppliers.
These decisions were taken during the first Cabinet meeting of the newly formed government held this morning at the Presidential Secretariat.