The Supreme Court has determined that the Value Added Tax (VAT) (Amendment) Bill as a whole is not inconsistent with the provisions of the Constitution if necessary amendments are made, Speaker Mahinda Yapa Abeywardena says.

He stated this conveying the Supreme Court’s determination on the VAT (Amendment) Bill during the parliamentary session this morning (Nov 10).

On an overall consideration of provisions of the bill, the Supreme Court is of the opinion that, subject to due amendments moved at the committee state of the parliament as proposed by the Deputy Solicitor General, the bill as a whole is not inconsistent with the provisions of the Constitution, Speaker Abeywardena told the House.

The Bill to amend the VAT Act No. 14 of 2002 was passed in the Committee on Public Finance on March 22, 2022.

It has been prepared to implement the tax policy proposals mentioned in the Cabinet Paper No. MF / FP / 32 / CM / 2021/212 dated December 14, 2021.

It proposes to increase the VAT on provision of financial services from 15% to 18%. 

In addition, this amendment provides 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 presented and passed in parliament on March 24, 2022.

It was challenged in the Supreme Court in terms of Article 121 (1) of the Constitution. Two petitions had been filed seeking a court order that the clauses included in this amendment bill are in violation of the constitution.

Following the conclusion of the hearing on October 26, the three-member Supreme Court bench comprising Chief justice Jayantha Jayasooriya, Justices S. Thurairaja and Arjuna Obeysekara announced that its decision on the petitions challenging the VAT (Amendment) Bill would be forwarded to the Speaker.