In its 2019 budget, the Cabinet of Ministers approved the tax changes suggested by Finance Minister Mangala Samaraweera. Accordingly, the Cabinet has approved the Amendment Draft Bills on Nation Building Tax and Value Added Tax (VAT). Thus, hotels, guesthouses, restaurants registered with the Tourist Board will be exempted from Nation Building Tax where they receive payment in foreign currency for such service through local commercial banks. This intended to reinforce the tourism industry. At the same moment, Nation Building Tax will also be exempted from importing yachts and other boats for enjoyment or sport reasons.
The NBT exemption currently available to subcontractors in the construction industry sector will also be made available to major contractors. Furthermore, this tax concession will be given to importers of unprocessed gems on the National Gem and Jewelry Authority’s recommendation. This exemption from the NBT VAT Act will also amend the palm oil produced locally from imported crude palm oil. VAT payment dates currently fall on the fifteenth, twentieth and final dates of the month following each month of a taxable period are inconvenient for both taxpayers and tax authorities. Considering the taxpayers ‘ request, the date of payment of VAT will be changed to the 20th day of the month after the relevant month for such payment.
The current VAT has been revised for the supply of condominium housing units. Therefore, VAT will not be charged from such housing projects that sell housing units sold that do not exceed Rs.25 million each. If a residential unit is supplied by a condominium that had acquired a certificate of compliance from the appropriate local government authority or under a sales contract under the Notary Ordinance prior to the ratification of the VAT Amendment Act, VAT will also not be charged for such assets.
Furthermore, the local Rice Bran oil generated from local red rice will also be exempt from VAT. Simultaneously, as suggested in Budget 2019, the current VAT of Rs.75 per item of clothing sold locally by BOI authorized Apparel firms has been risen to Rs.100 per item. All of these amendments will be submitted to Parliament for approval in September once drafted by the Legal draftsman
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