GOVT. ANNOUNCES VAT CHANGES

A 15 percent Value Added Tax (VAT) would be imposed on private health services, other than diagnostic tests, dialysis tests and OPD charges, excluding medical consultations, under the VAT Amendment Bill, the Government announced yesterday.

Minister Gayantha Karunatilleke told a media briefing that 15 percent VAT would be imposed on tobacco products, powdered milk which contains added sugar or other sweetening matter and on air ticketing fees, under the amendment, which was approved by the Cabinet on Tuesday.

“Also there is a restriction on VAT exemption on lease or rent of residential accommodation and to projects of which investment costs do not exceed US $ 5 million. However, strategic development projects approved prior to November 1, 2015 and other projects where the sales agreement are entered into or projects completed before October 1, 2016 will be continued to be exempted from the VAT,” he said.

It was also announced that the piece rate of garments supplied to the local market by BOI companies would be increased to Rs. 75 per piece.

He also announced that the threshold for wholesale and retail trade has been increased to Rs 50 million per annum.

Minister Karunatilleke said the Bill would come into effect once it is approved in Parliament following the Gazette notice, which is expected to be done by today.

Minister Rajitha Senaratne said the VAT Amendment Bill would be effective only until Sri Lanka receives funds, which had been pledged by the Asian Development Bank (ADB) and the World Bank (WB).

Asked whether amounts paid as VAT before the introduction of new regulations would be reimbursed, the Minister said the Government would have to decide on it after a discussion.