COLOMBO (NewsRadio); The Cabinet of Ministers has granted approval to the proposal to abolish the Simplified Value Added Tax (SVAT) scheme from the 1st of January, 2024.
According to the agreement reached with the International Monitory Fund, the government is required to introduce two major reforms with respect to the Value Added Tax (VAT).
Accordingly, the government is required to remove a majority of the tax exemptions and also abolish the SVAT scheme.
The Cabinet paper states, approximately 1.2 per cent of the gross domestic product from the tax income can be increased by removing exemptions granted with respect to the Value Added Tax.
The Cabinet paper presented by the Minister of Finance, Economic Stabilization and National Policies proposes to remove most of the exemptions from the Value Added Tax, but retaining provisions which provide tax concessions to ease the pressure on low income families and fundamental sectors of the economy as well as the exemptions to sectors such as education, health and agriculture.
The Cabinet paper also proposes several revisions to the Value Added Tax Act which will allow the abolishment of the Simplified Value Added Tax methodology with effect from the 1st of January, 2024.
Accordingly, the Cabinet of Ministers has granted concurrence to the resolution forwarded by the Minister of Finance to introduce a more formal methodology for repaying the Value Added Tax and to instruct the Legal Draftsman to prepare a draft Bill for the purpose.
