TAX HIKE: Sri Lanka to increase VAT to 18% in 2024

COLOMBO (News 1st); The Sri Lankan Cabinet granted approval to increase the value added tax to 18% with effect from the 1st of January 2024, and impose the said tax on certain goods and services to which the value added tax is not yet applicable.

This was announced by Cabinet Spokesperson & Minister Bandula Gunawardena during the weekly news briefing to announce cabinet decisions.

The Department of Government Information said that Various tax based enhancing and developmental tax policy proposals have been implemented from the month of June 2022 for the state financial stability based on the income with the objective of ensuring loan sustainability and as a result of that, the state tax revenue of the first 09 months of 2023 has been escalated by 51% compared to the year 2022. 

However, tax collection targets agreed with the International Monetary Fund have not yet been accomplished. 

Accordingly, the Cabinet of Ministers granted approval to escalate the value added tax rate up to 18% with effect from 01.01.2024, impose the said tax on certain goods and services to which the value added tax is not yet applicable and implement some of new tax proposals with effect from 01.01.2024 including the imposition of that tax to enable accomplishment of tax revenue and primary balance targets as agreed with the International Monetary Fund.