New tax hikes and levies on range of supplies confirmed by Parliament – 1 January 2022 implementation
Update: Sri Lanka VAT raised to 12% from 1 June 2022
The drop in revenues during the COVID-19 crisis has forced the government to propose a range of tax rises as the economy begins to recover. The country enjoyed 8% growth in the first half of 2021.
Sri Lanka’s has this week approved the raising of the Value Added Tax rate from 15% to 18% for 2022 only on banking and other nominated financial services institutions. The standard rate for other supplies is 8% following a drop from 15% in 2019. Previously, the rate had been 11% until November 2016.
It will also introduce a new 2.5% Social Security Contribution turnover tax on businesses with a turnover over Rs 120millioin (approximately $600,000) per annum.
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A limited Goods and Services Tax (GST) will also be introduced from 1 January 2022 for the following supplies which already have industry-specific levies and taxes:
- Motor vehicles
- Telecoms services
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