The Cabinet has approved drafting changes to a Value Added Tax law that would boost tax revenues by removing exemptions, Cabinet Spokesman and Mass Media Minister Dr. Bandula Gunawardena said.
Speaking at the weekly Cabinet media briefing held yesterday at the Government Information Department, Cabinet Spokesman Minister Dr.Gunawardena said that a number of items currently exempted would be removed and the exemptions on health, education, agriculture and items affecting low-income persons, would remain further.
Two major reformations in regard to the Value Added Tax (VAT) will be introduced according to the comprehensive funding facility of the International Monetary Fund.
Under that, removing most of the releases, the reformation of the Value Added Tax (VAT) scheme and cancellation of the Simplified Value Added Tax (SVAT) methodology should be applied. Around 1.2 percent of the Gross Domestic Product from the tax income can be increased by re-activating the logic of the existing release of Value Added Tax (VAT). The Cabinet of Ministers granted concurrence to the resolution forwarded by the Finance, Economic Stabilisation and National Policies Minister to remove most of the releases from Value Added Tax (VAT), further retaining releases that ease the pressure on low - income families to secure the fundamental sectors of the economy as well as the releases for sectors such as education, health and agriculture, as well as to revise the provisions applicable for the Value Added Tax (VAT) act so that the Simplified Value Added Tax (SVAT) methodology can be cancelled from January 1, 2024 by introducing a more formal methodology for repaying the Value Added Tax (VAT) and to instruct the Legal Draftsman to prepare a draft bill for the purpose.
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