The Value Added Tax (Amendment) Bill, to increase the tax on financial services from 15% to 18%, was passed in Parliament today (March 24).

The Second Reading of the Value Added Tax (Amendment) Bill was taken up for debate from 11.00 am to 4.30 pm today.

The Bill to amend the Value Added Tax Act No. 14 of 2002 was recently passed in the Committee on Public Finance (COPF). 

The approval was given at the meeting of the Committee on Public Finance chaired by Member of Parliament Anura Priyadarshana Yapa at the Parliament complex on March 22.

This Bill was prepared to implement the tax policy proposals mentioned in the Cabinet Paper No. MF / FP / 32 / CM / 2021/212 dated 14th December 2021.

Accordingly, the Value Added Tax on the provision of financial services will be increased from 15% to 18% with effect from 1 January 2022. 

In addition, this amendment will provide for the exemption of VAT only on medical equipment, machinery and pharmaceutical donations made to Government Hospitals and the Ministry of Health in the event of any epidemic or public emergency.

The tax amendment bill was subsequently presented to Parliament today (24).

Members of the Committee on Public Finance were of the view that a proper economic analysis should be done on any reduction or increase in the tax collection process in the country.