In a decisive move, the Cabinet of Ministers, during its meeting on Monday (Dec.11), granted approval for a reduction in the Value-Added Tax (VAT) registration threshold. This decision will see the VAT registration threshold decrease from Rs.80 million per annum to Rs.60 million per annum, effective from January 01, 2024.
The legislative underpinning for this adjustment was solidified with the passage of the Third Reading of the VAT (Amendment) Bill in Parliament on Monday. The Bill, which garnered majority support with 100 MPs voting in favor and 55 against, introduced amendments to reflect the revised VAT registration threshold.
Consequently, the House endorsed an increase in VAT from the existing 15% to 18%. This adjustment precedes the awaited approval by the International Monetary Fund (IMF) for the second tranche of a $2.9 billion bailout for the nation grappling with economic challenges.
Today, the Executive Board of the IMF is slated to review the first leg of the 48-month Extended Fund Facility (EFF) Arrangement for Sri Lanka.
However, amidst these developments, the Ceylon Chamber of Commerce has voiced apprehensions regarding the proposed VAT increase to 18%, highlighting concerns that such a move could further contribute to a decline in consumption.
