The Ceylon Electricity Board (CEB) is waiting for a clarification from relevant institutions including the Ministry of Finance, Economic Stabilisation, and National Policies and the Treasury as to whether the value-added tax (VAT) rate increase to be implemented from today (1 January) will have any impact on electricity tariffs, The Daily Morning learns.

The Government, amidst strong criticism, has increased the VAT rate from 15% to 18% – by 3% – through Budget 2024, with effect from today.

In response to a query by The Daily Morning as to whether the VAT increase would have any effect on electricity tariffs, a senior official of the CEB yesterday (31 December) said that the relevant authorities have informed that it (the VAT revision) would not be applicable to electricity tariffs, but that the CEB was expecting a formal clarification on the matter.

“State Minister of Finance Ranjith Siyambalapitiya and the Treasury were saying that the VAT increase will not be applicable to electricity tariffs, but we cannot make a confirmed statement until we get a clarification. The Finance Ministry and Treasury will let us know about this by tomorrow (2 January),” the senior CEB official said.

Attempts to contact CEB Chairman Nalinda Illangakoon and the Ministry of Power and Energy on the matter proved futile.

The Budget 2024 presented to Parliament by President and Finance, Economic Stabilisation, and National Policies Minister Ranil Wickremesinghe stated that the VAT rate would be increased up to 18% in January 2024 along with elimination of VAT exemptions other than for products related to the health and education sectors, and a few essential commodities. Any possible impact of VAT revision on electricity tariffs is likely to attract great public criticism as the tariffs have been increased at higher rates on several previous occasions in the recent past.