Cabinet nod to raise VAT from January 2024
October 31, 2023 12:27 pm
The Cabinet of Ministers has given its approval to increase the Value-Added Tax (VAT) from next year, the government says.
As such, VAT will be raised from 15% to 18% with effect from January 01, 2024.
Additionally, the VAT will be imposed on certain goods and services on which the tax is not yet applicable.
Further, some of the new tax proposals will also be implemented with effect from January 01, 2024, to enable the realization of tax revenue and primary balance targets as agreed with the International Monetary Fund (IMF).
The decision was taken after observing that the tax collection targets agreed with the IMF are yet to be accomplished.
The government mentioned that state tax revenue of the first 09 months of 2023 has gone up by 51% compared to the year 2022 after various tax-based increases and developmental tax policy proposals were implemented from June 2022 for the state financial stability based on the income, with the objective of ensuring loan sustainability.
“Public revenue increased to 1.7 trillion rupees ($5.19 billion) in the first nine months when compared to last year but this amount is barely sufficient to pay public sector salaries, meet welfare payments and other recurrent expenditure,” Gunawardana, who is the cabinet spokesman, told reporters.
“We know the public is struggling, so even though we are very reluctant to we have no choice but to increase taxes,” he said.
Additional taxes are likely to be introduced in the budget, which will be presented to parliament in mid-November, said Gunawardana.
--With agencies inputs
