Proposal to increase VAT on financial services approved

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The Committee on Public Finance has green-lighted a proposal to increase the value added tax on financial services from 15% to 18%.

The approval was given at a meeting of the COPF chaired by Anura Priyadarshana Yapa at the parliamentary complex yesterday (22).

A bill has been prepared to implement the tax policy proposals mentioned in a cabinet paper dated 14 December 2021 to raise the VAT on the provision of financial services with effect from 01 January 2022.

In addition, the amendment will provide for the exemption of VAT on medical equipment, machinery and pharmaceutical donations made to government hospitals and the Ministry of Health in the event of an epidemic or public emergency.

The tax amendment bill will be presented to Parliament tomorrow.

Members of the Committee were of the view that a proper economic analysis should be done on any reduction or increase in the tax collection process.

The COPF also approved an agreement between the governments of Sri Lanka and Turkey for the avoidance of double taxation and prevention of tax evasion with respect to taxes on income.