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VAT increased from 15% to 18%

24 Mar 2022

  • Public Fin. Committee approves amendment to VAT Act 
  • Medical equipment, machinery, and medicines donated to government hospitals and the Ministry of Health exempted from VAT
    The Bill to amend the Value Added Tax (VAT) Act No. 14 of 2002 increasing the VAT provision of financial services from 15% to 18%, was passed by the Committee on Public Finance (COPF).  The approval was given at a meeting of the COPF chaired by Member of Parliament Anura Priyadarshana Yapa at the Parliament complex on Tuesday (22). This Bill has been prepared to implement the tax policy proposals mentioned in Cabinet Paper No. MF/FP/32/CM/2021/212 dated 14 December 2021. Accordingly, the VAT on the provision of financial services has been increased from 15% to 18% with effect from 1 January 2022. In addition, this amendment will provide for the exemption of VAT only on medical equipment, machinery, and pharmaceutical donations made to government hospitals and the Ministry of Health in the event of any epidemic or public emergency. The tax amendment Bill will be presented to Parliament on 24 March. Members of the COPF were of the view that a proper economic analysis should be done on any reduction or increase in the tax collection process in the country. The COPF also approved the agreement between the Government of the Democratic Socialist Republic of Sri Lanka and the Government of the Republic of Turkey for the avoidance of double taxation and prevention of tax evasion with respect to taxes on income.  State Ministers Dr. Nalaka Godahewa and Kanchana Wijesekera; Members of Parliament Dilan Perera, Prof. Ranjith Bandara, Nalin Fernando, Dr. Harsha de Silva, Suren Raghavan, Mujibur Rahman, and Isuru Dodangoda; and a group of officials from the Ministry of Finance were present at this occasion. 


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