VAT WILL STABILISE COUNTRY’s ECONOMY
No SIGNIFICANT IMPACT on essentials – Adviser:
Rs.1,400 Billion expected from VAT in 2024 :
PAL Levy will be discontinued in 2024:
Finance Ministry’s Tax Policy Adviser, Thanuja Perera refuted the prevailing social notion that the amendment to the Value Added Tax (VAT), set to be enforced from January 1, will pose significant challenges for individuals in their daily lives.
She made these remarks while attending the special press conference held yesterday (27) evening at the Presidential Media Centre in Colombo Fort regarding the VAT Amendment Act and its impact. She also explained that the government hopes to stabilise the country’s economy again very soon by increasing government revenues and removing tax exemptions and tax concessions as much as possible. She highlighted that the present Port and Airport Development Levy (PAL) will not be charged with the implementation of VAT revision from January 1.
“7.5 PAL is charged on many items and with the implementation of VAT, it will be discontinued from January 1,” she added.
She pointed out that the drastic increase in government expenditure over the limited state income, is a very negative situation and mentioned that the government has taken a number of policy decisions to manage the finances by limiting the government expenditure as much as possible.
Accordingly, even if the VAT revision is done from January 1, 2024, the price of goods and services will not increase significantly since the increase of VAT is 3 per cent over many commodities as most of the commodities are charged 15 per cent VAT, she said. From 2024, with the revision of VAT, the registration limits for VAT collection will decrease. Currently, only those who had a turnover of 300 million rupees per year were registered to collect VAT. However it was amended and accordingly, those who have a turnover of Rs.80 billion rupees per year should register for VAT. But it was revised to an annual turnover of 60 billion rupees from next year. This situation helps to widen the VAT base.
The number of VAT exemption goods will be reduced by more than one-third. Through this, the country’s tax revenue increases.
“But there are many VAT free items. Many goods and services including wheat, wheat flour, baby milk powder, health and education services are exempt from VAT”.
Director of the State Revenue Unit of the President’s Office Eranda Kodituwakku said that despite the tax revision, many economic activities including goods and services imported from abroad have been exempted from VAT, supporting the people who deserve much-needed relief.
“Even if the price of a product or service increases with the revision of VAT, the end consumer has to bear that price. But this does not impose a tax on taxes,”he said.
Commissioner of Inland Revenue A.M.Nafeer said that a proper mechanism is needed to increase the tax revenue of the country.
“We will create a tax policy that is acceptable to all,”. Accordingly, he pointed out that a formal system and programme of tax collection should be prepared. President’s Office State Revenue Unit Director W.A.G. Kumaratunga said that it is aimed to collect Rs.555 billion from VAT in 2023. So far up to December 27, an income of Rs.460 billion has been received. An income of Rs.1,400 billion is expected from it in 2024. Deputy Director of the Economic Research Department of the Central Bank of Sri Lanka (CBSL) Janaka Edirisinghe said that the impact of the VAT amendment on the consumer population of our country should be estimated roughly.
The Central Bank of Sri Lanka, Census and Statistics Department calculated inflation before the VAT revision. It is 3.9 percent. Inflation may increase by 2 to 3 percent after the new tax reforms.
“Accordingly, we can roughly describe the effect of this as a 2-3 percent price increase,” he said.
The post VAT WILL STABILISE COUNTRY’s ECONOMY appeared first on DailyNews.