• 3700 new entities registered, State anticipates to raise Rs 1,400 b in ’24

The Inland Revenue Department (IRD) has implemented the forced registration of businesses that have not been registered to charge Value Added Tax (VAT) even though their VAT threshold has been exceeded, The Daily Morning learns.

When contacted by The Daily Morning yesterday (31) IRD Commissioner General Sepalika Chandrasekara said that the IRD has implemented the method of forced registration to register the companies and individuals that have not been registered with the IRD for charging VAT.

She noted that this decision was taken to strengthen the VAT registration process and to identify the parties that evade the registration seeking other benefits.

Chandrasekara said that the number of businesses and individuals that are registered to charge VAT has increased from 13000 to 16700 after the new regulations were implemented to streamline the tax collection process. “We have implemented forced registration to register the parties that are not registered for the charging of VAT, even if they have exceeded the VAT threshold. After the registration, we will be taking measures to collect the VAT for the past years as well,” she added.

This decision was taken following a period of two weeks that were given to the businesses to complete registration to charge VAT. Following a number of complaints received by the IRD regarding the illegal charging of VAT, the IRD took legal action against some businesses that had illegally charged the tax without being registered with the IRD as a VAT-paying business.

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 taxable period (from Rs. 20 million). These changes to the VAT are expected to generate revenue of around Rs. 1,400 billion this year.