VAT to Increase to 18% from Next Year, Imposed on More Goods and Services

• VAT will be increased from 15% to 18% starting from January 1, 2024
• The increased VAT will also be imposed on currently untaxed goods and services
• The government had taken steps to increase tax revenue, resulting in a 51% increase in tax revenue during the first nine months of 2023 compared to 2022
• The government failed to reach the tax collection targets recommended by the IMF, leading to a delay in the release of the second tranche of its loan
• Former President Gotabaya Rajapaksa had previously reduced the VAT from 15% to 8% in 2019, which was then increased to 15% in September 2022
• Sri Lanka collected approximately Rs 1,751 billion in taxes in 2022, with a total tax and non-tax revenue of Rs 1,979 billion
• Significant amounts were spent on salaries, pensions, and social welfare programs
• The Minister commented on state employees’ demand for a pay hike, stating that increasing salaries would require money from the people.

Source: island.lk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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