The government has decided not to proceed with the proposed reduction of the annual turnover threshold for Value Added Tax (VAT) and the Social Security Contribution Levy (SSCL), which was scheduled to come into effect from July 1.

The current threshold of Rs. 60 million will remain unchanged and the earlier proposal to lower it to Rs. 36 million will not be implemented at this stage, the Deputy Minister of Economic Development, Nishantha Jayaweera informed Parliament today (23).

He added that although the revision will not be introduced, small and medium-sized enterprises are encouraged to register for VAT voluntarily, even if their turnover falls below the threshold.

“Going forward, the VAT threshold will remain at Rs. 60 million. However, even those below the threshold can voluntarily register for VAT if they wish,” Deputy Minister Jayaweera said.

Separately, Deputy Minister of Mass Media Dr. Kaushalya Ariyarathna told Parliament that the proposal had been extensively discussed at the Committee on Public Finance (CoPF) before the decision was made.

She said the present government concluded that it was not the appropriate time to implement the reduction, citing the need for the Inland Revenue Department to strengthen administrative systems and prepare tax collection mechanisms.

Deputy Minister Ariyarathna added that the Cabinet of Ministers had taken the decision to defer the measure, and that necessary procedural approvals, including from the Attorney General, had been obtained for the matter to proceed through the committee stage.