The Inland Revenue Department (IRD) has given businesses a period of two weeks to complete registration to charge Value Added Tax (VAT), said the IRD Commissioner General W.A. Sepalika Chandrasekara.

Following a number of complaints received by the IRD regarding the illegal charging of VAT, the IRD took legal action against a business that had illegally charged the tax without being registered with the IRD as a VAT paying business. 

Against this backdrop, speaking to The Daily Morning yesterday (31 January), Chandrasekara said that the IRD is taking measures to raid unregistered businesses that charge VAT, adding that the IRD is continuously regulating market misconduct reported around the island. 

“We are frequently receiving complaints related to such illegal businesses. We are continuously monitoring the market and taking necessary action to prevent the public from being exploited. Last week, IRD officials raided a business for charging VAT without being registered in the IRD,” she said.

Chandrasekara further noted that the IRD has decided to give businesses two weeks to get registered as a VAT paying entity before launching the regulation programmes at once. “Two weeks have been given to businesses to get registered with us, since we thought that it was a good measure to take before launching raids. Within the given period of time, anyone who is willing to register can get it done because the registration licence must be compulsorily displayed in a clearly visible place in the business if someone is charging VAT as per the Inland Revenue Act,” she added.

She urged the public to give any information regarding such illegal and wrongful conduct to the IRD and also said that people must be attentive and aware of the process of charging VAT.

Along with the change in tax rates following the enactment of the recently passed VAT Act as amended, the VAT threshold for businesses was also reduced to an annual turnover of Rs. 60 million (from Rs. 80 million) and Rs. 15 million per the taxable period (from Rs. 20 million). These changes to the VAT are expected to generate revenue of around Rs. 1,400 billion this year (in 2024).