Sri Lanka's Finance State Minister, Ranjith Siyambalapitiya, has announced that nearly 100 goods that were previously exempt from the Value-Added Tax (VAT) will now be subject to the tax, in a move intended to increase state revenue.
During a parliamentary debate on VAT amendments, Siyambalapitiya stated that 97 out of 138 previously exempt goods will now be affected by the VAT. Additionally, SMS messages transmitted over fixed telephone networks will also be subject to the VAT.
Siyambalapitiya sought to alleviate public concern by proclaiming that certain essential items will continue to be exempt from VAT. Medicines, equipment used by disabled persons, rice flour, wheat flour, vegetables, fruits, and liquid milk, as well as the 'Suwaseriya' ambulance service, will remain free from the tax.
The Finance State Minister further noted that recent tax policy revisions had led to a noted increase in government revenue. By increasing the state's reserves to between USD 5-6 billion – up from their current level of USD 3.8 billion – the government expects the currency to appreciate and the prices of goods to decrease.
The VAT (Amendment) Bill and Finance Bill saw parliamentary debate throughout the day on December 10. The Cabinet of Ministers approved a VAT increase in October, which will raise taxes from 15% to 18% starting January 1, 2024.
