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| Sunday, 28 July 2002 |
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| News Business Features Editorial
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VAT from August 1 The Value Added Tax (VAT), introduced by the maiden budget of the United National Front Government, will come into effect from August 1. The VAT, which was scheduled to be introduced with the abolishing of the Goods and Services Tax (GST) and National Security Levy on July 1, could not be implemented due to a legal impediment. The initial date of implementation was June 1, but to smoothen operations the date was advanced to July 1. Apart from the introduction of two positive rates of 10 per cent and 20 per cent, VAT will have zero ratings and exemptions. The same threshold applicable to GST, ie Rs 500,000 per quarter or Rs 1.8 million per annum, will be applicable to VAT. The lower band of 10 per cent will apply to essential goods and services while all other goods and services will be charged at the standard rate of 20 per cent. Local buying and selling are not liable for VAT. Goods in Customs-bonded warehouses are exempt while fabrics, fibre, yarn, grey cloth, chemicals and dyes imported by Board of Investment fabric manufacturers for export are also exempt. The Government expects to collect around Rs 3.5 billion this year through VAT. GST was introduced on April 1, 1998 at a standard rate of 12.5 per cent was applicable on all goods and services. Exports and services relating to exports were zero-rated while certain activities and items were exempted. |
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