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Commodity price hike near – VAT likely to soar up to 15% following IMF instructions

The prices of all essential and non-essential commodities are soaring amid the growing economic crisis in the country. Reports claimed that the prices of commodities which used to go up by limited amounts have now surged even by 25 – 50 per cent at once.

Meanwhile, the value added tax (VAT) which was curbed to 08 per cent upon the coming of President Gotabaya Rajapaksa in 2019 is reportedly being considered for a surge up to 15 per cent, leading to a possible second strike on the commodity prices.

Currently two top envoys of the International Monetary Fund (IMF) are in Sri Lanka offering a number of conditions to provide debt assistance to overcome the crisis.

The IMF’s first and foremost condition is to surge the Goods and Services Tax, which was reduced from 15 per cent to 08 per cent, back to 15 per cent, a mandatory requirement to be able to obtain a IMF-led debt facility.

The decision to exempt all services related to the Tourism Sector from the VAT in 2019 may also have to be reversed as per the terms of the IMF.

MIAP

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