Sri Lanka to increase VAT to 18% in 2024

Colombo, Oct 31 Sri Lankan has approved to increase the value added tax (VAT) to 18 per cent from January, 2024, cabinet spokesperson Bandula Gunawardena said on Tuesday.

At a press conference here on Tuesday, Gunawardena said that increased VAT will also be imposed on certain goods and services that are currently not being taxed.

He said that the government has taken significant steps to increase tax revenue. The tax revenue in the first nine months of 2023 was 51 per cent higher than in 2022, he added, Xinhua news agency reported.

However, the government has failed to reach tax collection targets agreed on with the International Monetary Fund (IMF), leading to the IMF delaying the release of the second tranche of its financial aid package, he said.

The South Asian country reduced VAT from 15 percent to 8 percent in 2019, and raised it two times to 15 per cent in 2022.