Proposed in last budget
The Cabinet of Ministers has approved the tax amendments proposed by Finance Minister Mangala Samaraweera in his Budget 2019, according to a press release from the Ministry of Finance. The Cabinet has, accordingly, approved the Amendment Draft Bills on Nation Building Tax (NBT) and Value Added Tax (VAT).
Hence, hotels, guest houses, and restaurants which are registered with the Sri Lanka Tourist Development Authority, where they receive payment for services rendered in foreign currency through local commercial banks, such money will be exempted from NBT. This has been aimed at strengthening the tourism industry. At the same time, importation of yachts and other vessels for pleasure or sport purposes will also be exempted from NBT.
The exemption from NBT, at present available to sub-contractors in the construction industry sector, will be made available to the main contractors too. In addition, this tax concession will be given to the importers of unprocessed gems on the recommendation of the National Gem and Jewellery Authority. The palm oil manufactured locally out of imported crude palm oil will also come under this exemption of NBT.
The VAT Act will also be amended. VAT payment dates currently fall on the 15th, 20th and last day of the month following each month of a taxable period. This is inconvenient for the taxpayers as well as the Tax administration. In consideration of the request of the taxpayers, the VAT payment date will be changed to the 20th day of the month following the month relevant to such payment.
The existing VAT on the supply of Condominium housing units has been amended. Accordingly, VAT will not be charged from such housing projects as sell housing units that are priced at LKR 25 million each or below.
If a housing unit is provided by a condominium, which had obtained a compliance certificate from the relevant local government authority, or under an agreement of sale under the Notary Ordinance, before the VAT Amendment Act was ratified, VAT will not be charged for such property as well.
In addition, locally produced Rice Bran oil, manufactured out of locally-produced red rice will also be exempted from VAT.
At the same time, as proposed by the Budget 2019, the existing VAT of LKR 75 per item of garments, sold locally by Board of investment (BOI)-approved apparel companies, has been increased to LKR 100 per item.
All these amendments, once drafted by the Legal Draftsman, will be presented to Parliament for approval in September.