Sajith Premadasa Slams VAT Amendments, Warns of Impact on Businesses

by Editor,
5 months ago
in Sri Lanka News

Opposition Leader Sajith Premadasa has strongly criticized the government’s proposed Value Added Tax (VAT) amendments, cautioning that the sweeping changes due to take effect from July 1 could stifle businesses rather than support economic growth.

In a statement posted on the social media platform X, Premadasa said the reforms would place excessive pressure on the private sector. “Sri Lanka widens the VAT net, raises rates, and tightens enforcement all at once… This isn’t reform. It’s extraction. You cannot tax an economy into growth,” he said, warning that businesses may struggle to survive under the increased burden.

The proposed VAT Amendment Bill, released on April 29, seeks to lower the annual registration threshold from Rs. 60 million to Rs. 36 million, bringing more small and medium enterprises into the tax system. It also proposes extending VAT to digital services provided by non-resident companies to local consumers and increasing VAT on financial services from 18% to 20.5%.

In addition, the Bill outlines stricter enforcement measures, including raising fines for tax offences to Rs. 1 million and introducing potential prison terms of up to six months. VAT-registered businesses would also be required to implement Inland Revenue Department-approved secure point-of-sale systems for real-time transaction reporting.

Further provisions include public disclosure of registered taxpayers, revised input tax rules, and exemptions for selected strategic businesses operating under the Colombo Port City framework.