Sri Lanka: VAT legislative changes

Sri Lanka: VAT legislative changes

Legislation concerning the value added tax (VAT) in Sri Lanka includes provisions establishing, among other measures, the VAT rate for supplies of goods and services.

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The new law establishes:

  • The VAT rates for supplies of services and for supplies of financial services
  • Rules for VAT registration as well as a new threshold amount for VAT registration purposes
  • The value of supplies, including the supplies of health care services for VAT purposes
  • The deemed input VAT (deemed VAT liability) for wholesale and retail transactions
  • VAT specifically related to the apparel industry
  • Restrictions on existing VAT exemptions for the dairy sector and residential accommodations and the removal of existing exemptions for certain dairy products, for health care services, and for the telecom industry as well as other imports or supplies that will be subject to VAT (effective 1 November 2016) including lightweight electrical and electronic goods, perfume, coal, liquor, cigarettes, and certain spare parts provided for the railroad and other government uses
  • New rules for “financial VAT” including the VAT period and the procedures for the submissions of returns

 

Read a 2016 report [PDF 176 KB] prepared by the KPMG member firm in Sri Lanka: Indirect Tax Alert

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