VAT and NBT cuts in Budget to be given from Sept.

Wednesday, 7 August 2019 00:20 - - {{hitsCtrl.values.hits}}

Cabinet approves VAT and NBT changes proposed in Budget 2019
Amendments to be presented to Parliament in Sept.
Hotels, guest houses and restaurants receiving payments in forex exempt from NBT
Yacht importers exempt from NBT
NBT for subcontractors to be extended to main contractors
VAT filing dates to be changed
No VAT for condominiums that sell units at less than Rs.25m

The Cabinet of Ministers has approved tax amendments on Value Added Tax (VAT) and Nation Building Tax (NBT) proposed by Finance Minister Mangala Samaraweera in his Budget 2019. Accordingly, the Cabinet has approved the Amendment Draft Bills on NBT and VAT, the Finance Ministry said in a statement yesterday.

Finance Minister Mangala Samaraweera

Thus, the hotels, guest houses, and restaurants which are registered with the Tourist Board, where they receive payment for such service in foreign currency through local commercial banks, such money will be exempted from Nation Building Tax. This measure is aimed at strengthening the tourist industry. At the same time, importation of yachts and other vessels for pleasure or sport purposes will also be exempted from Nation Building Tax (NBT).

The exemption of NBT presently available for subcontractors 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 presently fall on 15th, 20th and last date of the month following each month of a taxable period, which is inconvenient for the taxpayers as well as the tax administration. Considering 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 which sell housing units that are sold not exceeding Rs.25 million each.

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 also not be charged for such property as well.

In addition, the 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 Rs.75per item of garments sold locally by BOI-approved apparel companies has been increased to Rs.100per item.

All these amendments, once drafted by the Legal Draftsman, will be presented in Parliament for approval in September.