Amendments to VAT, NBT and STL

The Finance Ministry in a statement last week (April 12) said the Value Added Tax (VAT) rate will be increased to 15% from 11% from May 2, 2016.

The threshold for the registration for VAT is Rs. 3 million per quarter or Rs.12 million per annum. The Nation Building Tax (NBT) would remain unchanged at 2 percent.

Prime Minister Ranil Wickremesinghe tabled the tax amendments in Parliament last month.

The Finance Ministry statement also stated the re-imposition of the 0.3 percent share transaction levy. Wholesale and retail trade (other than by a manufacturer or importer) will be liable for VAT and the tax will be charged only on liable supplies.

The restriction on exempt supplies (deemed VAT) will be removed. Supplies which are currently exempted shall be liable for VAT.

These are telecommunication services, import or supply of telecom equipment or machinery, high tech equipment including copper cables for telecom industry, telco licences, healthcare services and supply of goods or services to any specified projects other than housing.

The threshold for the Nation Building Tax (NBT) will be reduced to Rs. 3 million per quarter from Rs. 25 million, except for locally procured agricultural produce in the preparation for sale.