The Cabinet of Ministers has approved two major reforms related to the Value Added Tax (VAT) in line with the International Monetary Fund (IMF)’s funding program. These reforms include restructuring the VAT system and discontinuing the Simplified VAT methodology as per the IMF’s requirements. By implementing these changes, it is estimated that tax income can be increased by approximately 1.2% of the gross domestic product. The Minister of Finance, Economic Stabilization, and National Policies, President Ranil Wickremesinghe, submitted a resolution to remove most VAT releases while retaining exemptions for essential sectors like education, health, and agriculture. The resolution also suggests revising the provisions of the VAT Act to replace the Simplified VAT methodology with a more formal repayment system, starting from January 1, 2024. The government has instructed the Legal Draftsman to prepare a draft bill for this purpose.
Source: newswire.lk
