Cabinet decides to abolish SVAT and large number of VAT exemptions

By Rathindra Kuruwita

The cabinet of ministers had approved a proposal by President Ranil Wickremesinghe to draft a bill to cancel the existing Simplified Value Added Tax (SVAT) methodology from January 01, 2024, and to remove a large number of VAT exemptions, cabinet spokesman Bandula Gunawardena told reporters on Tuesday.

Addressing the post-cabinet press conference, Gunawardena said Sri Lanka must introduce two major revisions to the Value Added Tax (VAT) as per the agreement with the International Monetary Fund.

Sri Lanka had a number of goods and services exempt from VAT and one IMF condition was that most of these exemptions be removed, he said.

Gunawardena also said that the SVAT system must also be cancelled, as per IMF agreement.

The President had proposed to revoke most of the VAT exemptions while keeping those given to education, health, and agricultural sectors as well as measures taken to ease the burden on the poor and to protect vital state interests, the minister said.