Saturday, February 24, 2024

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Key details revealed in new VAT surge

Colombo (LNW): An official from the Ministry of Finance has stated that the Value Added Tax (Amendment) Bill will render agricultural machinery, equipment, and chemical fertilisers previously exempted, subject to VAT.

However, agricultural seeds, plants, shrimp feed (excluding poultry feed), and animal feed will remain exempt. The Committee on Public Finance (CoPF) raised concerns about the impact on the domestic agricultural and food industry.

Dairy products, including liquid milk and eggs, will also become VAT liable. Nevertheless, wheat, wheat flour, powdered milk, pharmaceutical products, and drugs will be exempted.

The Committee questioned the imposition of VAT on food products made from locally cultivated grains categorised as “Posha,” given the rising concern of child malnourishment.

Ambulances, medical equipment, fertiliser, and certain agricultural items were also discussed. The Committee granted approval to the Value Added Tax (Amendment) Bill, with the condition that the Ministry of Finance incorporates proposed amendments. The Committee urged a reassessment of VAT exemptions for medical equipment, ambulances, fertiliser, and high-protein agro foods.

The Committee clarified that VAT changes will not affect UBER and PickME fares significantly, as these services have included VAT since their inception. The proposed VAT changes will result in only a 3 per cent increase in fares.

The Committee also considered the Finance Bill to amend the Finance Act, No. 35 of 2018 and the Finance Act, No. 12 of 2012, addressing provisions for releasing motor vehicles imported into Sri Lanka not cleared from customs due to import restrictions or non-payment of taxes.

Due to issues arising from importing and opening LCs post the suspension of motor vehicle imports, the Committee instructed the Ministry of Finance to submit a report on 119 imported vehicles yet to be cleared from customs. The Committee approved the Imports and Exports Control Act related to Gazette No. 2353/16.

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