Value Added Tax ( VAT)

Value Added Tax (VAT) [ Amendments to VAT Act No 14 of 2002]

Removal of exemptions

Import or supply of imported goods set out below will be liable for VAT:

Item Description Exempted HS Code

Plants & Flowers 06.01, 06.02.10, 06.02.20, 06.02.30, 06.02.40,06.02.90.90

Plastic Beads 39.26.90.70

Yarn /Fabrics 50.01, 50.02, 50.03, 50.04, 50.05, 50.06, 50.07, 51.11,51.12, 51.13, 52.01, 52.03, 52.05, 52.06, 52.08, 52.09,52.10, 52.11, 52.12, 53.09, 53.10, 54.02, 54.03, 54.07,54.08, 55.09, 55.10, 55.12, 55.13, 55.14, 55.15, 55.16,58.01, 58.02, 58.04.21, 58.04.29, 58.04.30, 58.06,58.09, 58.11, 60.01, 60.02, 60.03, 60.04, 60.05, 60.06,62.15

Wood & Articles 44.03, 44.07, 44.08, 44.09

Dyes 32.04.11, 32.04.12, 32.04.13, 32.04.14, 32.04,15,32.04.16,32.04.17

Glass Beads 70.18.10

Plant and Machinery/Industrial racks
84.07, 84.11.91, 84.13.40, 84.43.19.10, 84.43.32.30,84.43.32.40, 84.43.39.20, 84.43.99.30, 84.44, 84.45,
84.46, 84.47, 84.48, 84.51.40.10, 84.51.50,84.51.80.10, 84.51.90, 84.70.10, 84.79.89.10,84.79.89.20, 84.79.89.30 84.79.89.40

Electronic goods 85.16.40, 85.16.72, 85.27.21, 85.27.29, 85.27.91,85.27.92, 85.39.31.20, 85.43.70.30, 85.43.70.90,
85.43.90

Aeroplanes & Parts 88.02, 88.03.30, 88.05.21, 88.05.29 Spectacles 90.01, 90.02, 90.03, 90.04, 90.05

Cameras & Projectors 90.06, 90.07, 90.08, 90.10

Watches 91.01, 91.02, 91.05

Sale of condominium housing units

New Exemption
Solar tracker classified under HS Code 84.79.89.50

VAT Refunds

VAT refund
scheme for foreign passport holders will be implemented at the Airports and Sea Ports with effect from 01st May 2018.

Nation Building Tax (NBT)

Nation Building Tax (NBT) [Amendments to NBT Act No.9 of 2009]

Exemptions

Importation of non-motorized equipment and accessories for water sports such as Kayaks, Canoes, Kite Surfing, and diving

Importation of non-powered equipment and accessories for aero sports such as Hang Gliding, Ballooning, dirigibles, Parachutes and Para-Gliders

Importation of gem stones for cutting and re-export purposes

Importation of equipment that enables advanced technology agriculture practices, including greenhouses, poly tunnels and materials for the construction of greenhouses, by any grower.

Exemption on liquor will be removed.

Economic Service Charge (E S C )

Economic Service Charge ( ESC) [Amendments to ESC Act No 13 of 2006]

ESC base for imported motor vehicles will be amended as follows;

i. Motor vehicles liable for Excise duty – Payable Excise Duty

ii. Motor vehicles not liable for Excise duty – CIF value

Customs Import Duty

Customs Import Duty

Exemption of Custom Import Duty

Importation of Crust (semi processed) leather for further processing (Tanning Industry) and supply of raw materials for leather products industry.

Importation of machinery, equipment, accessories and raw materials or intermediate materials, to be used only for manufacturing of biodegradable packaging products and materials.

Customs Import Duty will be updated on importation of goods in line with the HS 2017 version and also revised on importation of selected goods.

CESS Duty

CESS Duty

Cess will be removed on 253 items under the HS Codes specified in Table 1, facilitating the emerging sectors namely, tourism, value adding industries and other industries.

Cess will be revised on 22 items classified under the following HS Codes, facilitating the availability of goods for value addition and consumption purposes.
0406.10.00 0406.40.00 0709.99.12 0709.99.20
0712.20.00 2922.42.10 4805.24.00 4805.25.00
4810.29.00 5208.11.20 5208.21.10 5208.21.90
6402.19.90 6403.19.90 6506.10.20 8509.40.00
8708.91.10 8708.91.20 4013.90.10 4013.90.90
9105.21.00 9105.29.00

Table 1
List of items selected for removal of CESS Duty
0201.10.00 0209.90.00 2101.20.12 4010.19.00 7607.20.20 0207.45.00 6910.10.10
0201.20.00 0210.11.00 2101.20.13 4010.31.00 7608.10.00 0207.51.00 6910.10.90
0201.30.00 0210.12.00 2101.20.19 4010.32.00 7608.20.00 0207.52.00 6910.90.10
0202.10.00 0210.19.00 2106.90.97 4010.33.00 7615.20.10 0207.53.00 7228.30.00
0202.20.00 0210.20.00 2201.10.10 4010.34.00 7802.00.00 0207.54.00 7404.00.00
0202.30.00 0210.91.00 2201.10.90 4010.35.00 7902.00.00 0207.55.00 7503.00.00
0203.11.00 0210.92.00 2201.90.10 4010.36.00 8002.00.00 0207.60.00 7602.00.00
0203.12.00 0210.93.00 2201.90.90 4010.39.00 8301.20.00 0208.10.00 7604.29.00
0203.19.00 0210.99.00 2203.00.10 4011.30.00 8301.70.00 0208.30.00 7607.20.10
0203.21.00 0305.10.00 2203.00.20 4011.70.00 8304.00.00 0208.40.00 9404.29.10
0203.22.00 0305.20.00 2203.00.90 4011.80.10 8306.10.10 0208.90.90 9404.29.20
0203.29.00 0305.59.10 2204.10.00 4011.80.90 8413.60.00 0209.10.00 9404.29.30
0204.10.00 0305.59.90 2204.21.00 4012.13.00 8413.70.11 0902.40.91 9404.29.90
0204.21.00 0403.10.00 2204.22.00 4012.90.10 8413.70.19 0902.40.92 9404.30.10
0204.22.00 0403.90.00 2204.29.00 4014.10.00 8415.10.10 0902.40.93 9404.30.90
0204.23.00 0405.10.00 2204.30.00 4014.90.00 8415.20.10 0902.40.99 9404.90.10
0204.30.00 0405.20.00 2205.10.00 4016.93.10 8415.20.90 1001.99.90 9603.90.90
0204.41.00 0405.90.00 2205.90.00 4016.93.20 8418.10.10 1513.21.00 9613.10.00
0204.42.00 0804.10.10 2206.00.10 4016.99.10 8418.10.90 1513.29.00 9613.20.00
0204.43.00 0804.10.20 2207.10.00 4016.99.20 8418.29.10 1517.10.30
0204.50.00 0806.20.00 2207.20.10 4017.00.10 8418.29.20 1517.10.90
0205.00.00 0808.30.00 2207.20.90 4301.10.00 8418.29.30 1803.10.00
0206.10.00 0809.40.00 2501.00.00 4301.30.00 8418.29.90 1804.00.00
0206.21.00 0810.50.00 2523.30.00 4301.60.00 8418.91.10 2101.20.11
0206.22.00 0810.90.90 2523.90.00 4301.80.00 8420.10.00 3912.11.00
0206.29.00 0902.30.13 2712.20.00 4301.90.00 8421.21.10 3912.12.00
0206.30.00 0902.30.19 2712.90.00 4302.11.00 8421.21.90 3912.20.00
0206.41.00 0902.30.23 3302.90.00 4302.19.10 8421.23.90 3913.10.00
0206.49.00 0902.30.29 3307.90.10 4302.19.90 8423.10.20 3914.00.00
0206.80.00 0902.30.33 3401.20.10 4302.20.00 8438.80.40 3916.10.00
0206.90.00 0902.30.39 3906.10.90 4302.30.00 8516.60.90 3916.20.00
0207.24.00 0902.40.11 3909.10.00 4823.70.00 8539.22.00 3917.40.10
0207.25.00 0902.40.12 3909.20.00 4911.99.30 8546.20.00 3926.10.10
0207.26.00 0902.40.13 3909.31.00 6701.00.00 8708.70.10 4007.00.00
0207.27.00 0902.40.19 3909.39.00 6703.00.00 8708.92.00 4010.11.00
0207.41.00 0902.40.21 3909.40.00 6704.11.00 8708.99.40 4010.12.00
0207.42.00 0902.40.22 3910.00.00 6704.19.00 8712.00.20 6801.00.00
0207.43.00 0902.40.23 3911.10.00 6704.20.00 8712.00.90 6815.20.00
0207.44.00 0902.40.29 3911.90.00 6704.90.00 8714.92.10 6815.91.00

Ports and Airports Development levy (PAL)

Ports and Airports Development levy

PAL on the items classified under following HS Codes will be reduced
8415.90.90 8418.91.10 8418.91.208418.99.00 8414.30.00 8450.90.00 8401.40.00 7411.10.00 8501.10.90 8414.90.10
7212.40.00 3920.30.10 9032.10.00 7210.30.00 8483.50.00 8501.20.00 8471.41.90 8471.49.90 8471.50.90 8473.30.90

PAL on the 253 items classified under HS Codes specified in Table 2, including importation of non-powered equipment and accessories for aero sports such as Hang Gliding, Ballooning, dirigibles, Parachutes and Para-Gliders will be removed.

PAL will be revised on the importation of non-motorized equipment and accessories for water sports such as Kayaks, Canoes, Kite Surfing, and diving.

Table 2

List of items selected for removal of PAL Duty

0101.21.00 0504.00.00 1205.10.00 2701.20.00 2834.10.00
0101.21.00 0505.10.00 1205.90.00 2705.00.00 2835.24.00
0101.29.00 0505.90.00 1206.00.00 2707.20.00 2836.60.00
0101.30.00 0507.10.00 1207.10.10 2708.10.00 2836.91.00
0101.90.00 0507.90.00 1207.21.00 2710.12.10 2836.92.00
0102.21.00 0508.00.10 1207.29.00 2710.19.10 2837.11.00
0102.29.00 0508.00.20 1207.30.00 2710.91.00 2837.19.00
0102.31.00 0508.00.90 1207.50.00 2711.12.00 2837.20.00
0102.39.00 0510.00.10 1207.60.00 2711.19.90 2840.11.00
0102.90.00 0510.00.90 1207.70.00 2711.29.00 2841.30.00
0103.10.00 0511.10.00 1207.91.00 2713.90.00 2841.80.00
0103.91.00 0511.91.10 1207.99.10 2716.00.00 2842.90.10
0103.92.00 0511.91.20 1207.99.90 2801.30.00 2842.90.20
0104.10.10 0511.91.20 1209.10.00 2802.00.00 2842.90.30
0104.10.90 0511.99.10 1209.21.00 2804.40.00 2843.10.00
0104.20.10 0511.99.20 1209.22.00 2804.50.90 2843.29.00
0104.20.90 0511.99.40 1209.23.00 2804.61.00 2843.30.00
0105.11.10 0511.99.50 1209.24.00 2804.80.00 2845.10.00
0105.11.10 0511.99.60 1209.25.00 2804.90.10 2846.10.00
0105.11.20 0511.99.90 1209.29.00 2805.12.00 2849.90.00
0105.11.20 0601.10.00 1209.30.00 2805.19.00 2850.00.00
0105.11.90 0601.20.10 1502.10.00 2806.20.00 2852.10.00
0105.12.10 0601.20.90 2502.00.00 2809.10.00 2852.90.00
0105.12.90 0602.10.00 2504.90.90 2811.11.00 2853.10.00
0105.13.10 0602.20.00 2505.10.10 2811.12.00 2853.90.00
0105.13.90 0602.30.00 2505.10.91 2811.29.20 2901.22.00
0105.14.10 0602.40.00 2508.50.00 2812.19.00 2901.23.00
0105.14.90 0602.90.10 2508.60.00 2812.90.00 2901.24.00
0105.15.10 0602.90.20 2508.70.00 2813.10.00 2901.29.00
0105.15.90 0604.20.00 2510.20.90 2815.30.00 2902.11.00
0105.94.00 0604.90.00 2511.10.00 2819.90.00 2902.20.00
0105.99.00 0709.99.11 2515.11.00 2820.90.00 2902.42.00
0106.12.00 0713.31.11 2515.20.00 2822.00.00 2902.43.00
0106.13.00 0713.31.21 2516.20.00 2824.10.00 2902.60.00
0106.14.00 0713.32.10 2518.10.00 2824.90.00 2903.13.00
0106.19.10 0713.33.10 2518.20.00 2825.10.00 2903.19.10
0106.19.20 0713.34.10 2518.30.00 2825.20.00 2903.22.00
0106.19.90 0713.35.10 2525.10.00 2825.30.00 2903.29.10
0106.20.00 0713.39.10 2528.00.10 2825.40.00 2903.82.00
0106.31.00 0802.21.90 2528.00.90 2825.50.00 2903.99.90
0106.32.00 0802.22.00 2530.90.20 2825.70.00 2904.20.10
0106.32.00 0802.31.90 2601.11.00 2825.80.00 2904.20.90
0106.33.00 0802.32.00 2602.00.00 2826.30.00 2905.16.00
0106.39.00 0810.20.00 2604.00.00 2827.31.00 2905.19.10
0106.41.00 0810.30.00 2608.00.00 2827.35.00 2905.29.00
0106.49.00 0810.40.00 2615.90.00 2827.41.00 2905.43.00
0106.90.00 0810.50.00 2617.10.00 2829.11.00 2905.49.00
0501.00.10 1061.10.00 2617.90.00 2830.90.00 2905.59.00
0501.00.90 1202.30.00 2620.11.00 2831.90.00 2906.12.00
0502.90.00 1204.00.00 2620.99.90 2833.29.10 2906.13.00
4704.21.00 4905.91.00 7019.11.00 7405.00.00 8411.21.00
2907.15.00 2918.19.00 2932.99.10 3801.20.00 4113.30.90
2907.21.00 2918.22.00 2933.11.00 3802.10.31 4114.10.00
2907.23.00 2918.30.00 2933.32.00 3802.10.32 4114.20.00
2907.29.00 2918.91.00 2933.33.00 3806.20.00 4206.00.00
2908.19.10 2918.99.10 2933.39.20 3807.00.10 4301.10.00
2908.19.90 2919.10.00 2933.49.00 3809.10.00 4301.30.00
2908.99.10 2919.90.10 2933.52.00 3811.11.00 4301.60.00
2908.99.90 2919.90.90 2933.54.00 3813.00.10 4301.80.00
2909.19.90 2920.19.90 2933.59.10 3814.00.20 4301.90.00
2909.20.90 2920.21.00 2933.79.00 3814.00.30 4302.11.00
2909.30.10 2920.22.00 2933.99.10 3815.12.00 4302.19.10
2909.30.99 2921.22.00 2934.10.00 3817.00.20 4302.19.90
2909.4110 2921.30.00 2934.91.00 3818.00.00 4302.20.00
2909.49.10 2921.42.00 2937.12.00 3824.30.00 4302.30.00
2909.50.10 2921.43.00 2937.19.00 3824.75.00 4303.10.00
2909.60.10 2921.44.00 2937.22.00 3824.79.00 4303.90.00
2910.10.00 2921.45.00 2937.29.00 3825.50.00 4304.00.00
2910.20.00 2921.49.00 2937.90.00 3826.00.00 4401.11.00
2910.30.00 2922.17.00 2938.10.00 3904.61.00 4401.12.00
2910.40.00 2922.19.00 2939.19.00 3904.69.00 4401.21.00
2910.50.00 2922.21.00 2939.20.00 3907.70.00 4401.22.00
2911.00.00 2922.29.10 2939.30.00 3912.11.00 4401.31.00
2912.12.00 2922.29.90 2939.69.00 4011.30.00 4401.39.00
2912.21.00 2922.39.00 2941.20.00 4012.13.00 4402.10.00
2912.49.00 2922.44.00 2941.30.00 4101.20.00 4402.90.10
2912.50.90 2924.23.10 2941.40.00 4101.50.00 4402.90.90
2913.00.00 2924.23.20 3102.50.00 4102.10.00 4404.10.00
2914.19.00 2926.10.00 3102.80.00 4102.21.00 4404.20.00
2914.23.00 2926.20.00 3103.90.00 4102.29.00 4406.11.00
2914.61.00 2926.90.00 3201.10.00 4103.20.00 4406.12.00
2914.62.00 2930.20.10 3201.90.00 4103.90.00 4407.99.10
2914.71.00 2930.20.90 3301.30.00 4103.90.00 4412.39.10
2914.79.00 2930.90.10 3307.90.10 4104.11.90 4413.00.10
2915.13.00 2930.90.20 3502.90.00 4104.19.10 4418.40.00
2915.24.00 2930.90.40 3507.90.10 4104.19.90 4418.50.00
2915.40.00 2931.31.00 3604.10.00 4104.41.00 4501.10.00
2916.15.00 2931.32.00 3605.00.00 4104.49.00 4501.90.00
2916.20.10 2931.34.00 3606.10.00 4105.10.00 4502.00.00
2916.20.20 2931.36.00 3606.90.00 4105.30.00 4503.10.00
2916.20.50 2931.37.00 3701.20.00 4106.21.00 4503.90.00
2916.20.90 2931.38.00 3702.31.10 4106.22.00 4504.10.00
2916.34.00 2931.39.00 3702.32.00 4106.31.00 4504.90.00
2916.39.00 2932.11.00 3702.39.00 4106.32.00 4701.00.00
2917.12.00 2932.12.00 3702.53.90 4106.40.10 4702.00.00
2917.13.00 2932.13.00 3702.54.00 4106.40.90 4703.11.00
2917.33.00 2932.14.00 3702.96.20 4106.91.00 4703.19.00
2917.36.00 2932.20.10 3702.96.90 4106.92.00 4703.21.00
2918.12.00 2932.20.90 3702.97.20 4112.00.00 4703.29.00
2918.13.00 2932.93.00 3704.00.10 4113.20.00 4704.11.00
2918.17.00 2932.94.00 3706.90.00 4113.30.10 4704.19.00
4706.10.00 4907.00.10 7019.12.00 7410.21.00 8411.22.00
4706.20.00 4907.00.20 7019.52.00 7410.22.00 8411.81.00
4706.30.00 4907.00.30 7019.90.20 7411.22.00 8411.82.00
4706.91.00 4907.00.40 7020.00.10 7419.10.00 8411.91.00
4706.92.00 4911.91.30 7020.00.40 7419.99.20 8412.10.00
4706.93.00 5113.00.00 7113.11.90 7501.20.00 841 8.50.9
4707.10.00 5202.10.00 7113.20.90 7502.10.00 8421.23.00
4707.20.00 5207.90.00 7114.11.00 7502.20.00 8428.10.10
4707.30.00 5208.11.20 7114.20.00 7504.00.00 8428.31.00
4707.90.00 5208.21.10 7116.10.00 7505.12.00 8429.30.00
4802.10.00 5208.21.90 7118.90.90 7505.21.00 8430.20.00
4802.20.00 5305.00.93 7201.20.00 7507.20.00 8430.31.00
4802.40.00 5308.10.00 7202.19.00 7801.91.00 8430.50.00
4802.54.20 5311.00.90 7202.29.00 7804.20.00 8432.90.10
4802.55.10 5607.29.00 7204.21.00 7901.20.00 8435.90.00
4802.56.10 5608.11.10 7205.21.00 7905.00.00 8438.60.00
4802.57.10 5702.39.10 7206.90.00 8001.20.00 8439.10.00
4802.58.20 5702.42.00 7207.20.90 8003.00.00 8439.91.00
4802.61.10 5702.50.20 7208.26.00 8041.11.10 8440.90.00
4802.62.10 5702.50.90 7208.37.00 8102.96.00 8442.40.00
4802.62.20 5702.99.00 7208.38.00 8103.90.00 8443.32.20
4802.62.90 5704.90.10 7218.10.00 8104.19.00 8444.00.00
4804.41.00 5906.91.00 7218.91.00 8104.30.00 8445.11.00
4804.49.00 5908.00.00 7218.99.00 8105.20.00 8445.12.00
4804.51.00 5911.31.00 7221.00.00 8106.00.90 8445.13.00
4805.12.00 6402.19.10 7222.11.00 8107.20.00 8445.19.00
4805.30.00 6403.19.10 7225.50.00 8107.90.00 8445.20.00
4805.50.00 6602.00.90 7225.99.00 8108.20.00 8445.40.00
4805.91.00 6703.00.00 7226.20.00 8109.20.00 8445.90.00
4805.92.10 6704.11.00 7226.92.00 8109.90.00 8446.10.00
4805.92.90 6704.19.00 7227.10.00 8111.00.90 8447.11.00
4805.93.10 6704.20.00 7228.10.00 8112.21.00 8448.11.00
4806.20.00 6704.90.00 7228.50.00 8112.29.00 8448.19.00
4808.40.10 6801.00.00 7228.80.00 8113.00.10 8448.20.00
4810.13.10 6901.00.10 7302.30.00 8113.00.90 8448.31.00
4810.14.10 7001.00.90 7304.51.10 8212.20.10 8448.32.00
4810.31.00 7002.10.00 7305.12.90 8215.91.00 8448.33.00
4810.32.00 7002.20.00 7305.20.90 8401.10.00 8448.39.00
4810.39.00 7002.31.00 7305.31.90 8401.20.00 8448.42.00
4811.10.00 7002.39.00 7305.39.10 8401.30.00 8454.10.00
4812.00.00 7003.20.00 7306.11.10 8401.40.00 8457.20.00
4813.10.00 7003.30.00 7306.19.10 8406.10.00 8459.10.00
4818.50.10 7010.10.00 7315.20.00 8406.81.00 8459.21.00
4822.10.00 7010.20.00 7321.19.00 8407.31.10 8459.31.00
4901.99.20 7011.20.00 7321.82.00 8407.32.10 8459.39.00
4903.00.00 7014.00.10 7326.20.10 8407.33.10 8459.49.00
4904.00.10 7015.10.00 7402.00.00 8407.34.10 8459.51.00
4904.00.90 7017.10.10 7403.12.00 8409.10.00 8460.12.00
4905.10.00 7017.20.10 7404.00.00 8411.01.20 8460.19.00
8460.31.00 8532.22.10 8703.10.29 9017.10.00
8460.40.00 8532.23.10 8801.00.00 9017.20.10
8461.20.00 8532.23.90 8802.11.00 9017.20.30
8461.30.00 8532.24.10 8802.12.00 9031.41.00
8461.40.00 8532.24.90 8802.30.00 9101.19.10
8468.10.00 8532.25.10 8802.40.00 9108.11.00
8470.30.00 8532.29.10 8802.60.00 9108.12.00
8472.90.10 8532.30.10 8803.20.00 9108.19.00
8472.90.90 8532.90.10 8803.30.00 9108.90.00
8473.10.90 8533.10.00 8803.90.00 9113.10.00
8473.40.10 8533.21.00 8804.00.11 9114.10.00
8473.50.10 8533.31.00 8804.00.19 9114.30.00
8475.10.00 8533.39.00 8804.00.90 9114.40.00
8475.21.00 8533.90.00 8805.10.00 9208.10.00
8476.81.00 8540.20.00 8805.21.00 9208.90.00
8479.89.20 8540.40.00 8805.29.00 9209.30.00
8479.89.50 8540.60.00 8903.10.10 9209.91.00
8501.61.10 8540.79.00 8903.99.10 9209.92.00
8501.61.90 8540.91.00 8904.00.10 9209.94.00
8501.62.00 8540.99.00 8904.00.90 9209.99.10
8501.63.00 8541.10.00 8905.10.00 9209.99.20
8501.64.00 8541.21.00 8905.20.00 9301.10.00
8502.40.00 8541.40.00 8905.90.00 9301.20.00
8506.30.00 8541.50.00 8906.10.00 9301.90.00
8506.40.00 8541.60.00 8906.90.00 9302.00.00
8506.60.00 8541.90.00 8907.10.00 9303.90.00
8519.20.00 8543.10.00 8907.90.00 9307.00.00
8519.30.00 8543.30.00 8908.00.00 9401.10.10
8519.50.00 8543.70.10 9001.20.00 9401.10.90
8519.81.10 8544.20.10 9002.20.00 9405.50.20
8522.10.00 8545.11.00 9002.90.00 9504.90.10
8523.29.20 8545.19.10 9003.90.10 9506.11.00
8527.12.00 8545.19.90 9003.90.90 9506.12.00
8528.49.10 8601.10.00 9005.90.00 9506.19.00
8528.59.10 8601.20.00 9006.30.00 9506.21.00
8528.72.10 8602.10.00 9006.40.00 9506.29.10
8528.72.20 8602.90.00 9006.51.00 9506.29.20
8528.72.31 8603.10.00 9006.52.90 9506.31.00
8528.72.32 8603.90.00 9006.53.10 9506.32.00
8528.72.32 8605.00.00 9006.53.20 9506.40.00
8528.72.33 8606.10.00 9006.53.90 9507.10.00
8528.72.34 8606.30.00 9006.59.10 9507.30.00
8528.72.34 8606.91.10 9006.59.90 9508.10.00
8528.72.35 8606.91.90 9006.61.00 9601.10.00
8528.72.36 8606.92.00 9006.69.00 9601.90.10
8528.72.36 8606.99.00 9006.99.00 9601.90.90
8528.73.10 8607.11.00 9007.10.10 9602.00.90
8528.73.20 8703.10.11 9007.10.90 9614.00.00
8532.21.10 8703.10.19 9012.90.00 9704.00.00
8532.21.90 8703.10.21 9013.10.00 9705.00.00

Excise Duty under Excise Ordinance

Excise Duty under Excise Ordinance

1) Liquor
Alcohol volume based Excise Duty depending on the type of liquor will be introduced as follows:
i. Hard liquor – Rs. 3,300/- per litre of alcohol

ii. Beer – Rs.2,400 per litre of alcohol

iii. Wine – Rs.2,400 per litre of alcohol

2) Non-potable alcohol
Excise duty will be imposed on import of non-potable alcohol at Rs.15/- per Kg.

3) Raw material used for manufacturing of ethanol
Excise Duty will be imposed on raw materials used for manufacturing of ethanol to be as follows :
Type of raw material Proposed Duty (Rs.)
Toddy Rs.05/- per litre
Molasses/Maize/Rice/Fruits Rs.10/- per Kg

4) Liquor Licenses
Rate structure of Liquor license fee will be simplified w.e.f. 01/01/2018

5) Issuance of new liquor license will be simplified to promote tourism.

6) Changes to Excise Duty will be published by Gazette.

Excise (Special Provisions) Duty

Excise (Special Provisions) Duty

1) Canned Beer
Excise (Special Provisions) Duty applicable on canned beer will be removed.

2) Sugar tax on sweetened beverages
Excise duty based on the quantum of sugar contained will be introduced for the beverages with added sugar.

This duty applicable for beverages classified under HS Code 22.02

The rate will be 50 cts per gram of sugar

3) Plastic resin
Excise duty on plastic resin will be introduced at Rs.10 per Kg.

This duty will be applicable for items classified under the HS Codes 3901.10, 3901.20, 3902.10, 3903.11 and 3904.10

4) Motor vehicles
Ad-valorem rate of excise duty on motor vehicles will be removed

Excise duty will be applied based only on the Engine Capacity (cubic centimeter (cm3 )) for petrol and diesel motor vehicles

Excise duty base for electric vehicles will be the motor power of the engine (kilowatt (Kw))

The rate for Engine capacity based excise duty on petrol fuel & petrol hybrid motor cars are as follows.
Engine capacity Petrol fuel (Rs. Per cm3 ) Petrol hybrid (Rs. Per cm3 )
≤ 1000cm3 1,750 1,250

1000cm3 < x ≤ 1300 cm3 2,750 2,000 1300cm3 < x ≤ 1500 cm3 3,250 2,500 1500cm3 < x ≤ 1600 cm3 4,000 3,000 1600cm3 < x ≤ 1800 cm3 5,000 4,500 1800cm3 < x ≤ 2000 cm3 6,000 5,000 2000cm3 < x ≤ 2500 cm3 7,000 6,000 2500cm 3 < x ≤ 2750 cm3 8,000 7,000 2750cm3 < x ≤ 3000 cm3 9,000 8,000 3000cm3 < x ≤ 4000 cm3 10,000 9,000 4000 cm3 < 11,000 10,00 5) The rate for Engine capacity based excise duty on diesel fuel & diesel hybrid motor cars are as follows: Engine capacity Diesel fuel (Rs. Per cm3 ) Diesel hybrid (Rs. Per cm3) ≤ 1500cm3 4,000 3,000 1500cm3 < x ≤ 1600 cm3 5,000 4,000 1600cm3 < x ≤ 1800 cm3 6,000 5,000 1800cm3 < x ≤ 2000 cm3 7,000 6,000 2000cm3 < x ≤ 2500 cm3 8,000 7,000 2500cm3 < x ≤ 2750 cm3 9,000 8,000 2750cm3 < x ≤ 3000 cm3 10,000 9,000 3000cm3 < x ≤ 4000 cm3 11,000 10,000 4000 cm3 < 12,000 11,000 6) Duty rates for Electric vehicles are as follows: Motor power Unregistered (brand new) vehicle (Rs.Per kw) Used vehicle (Rs. Per kw) ≤ 50 Kw 7,500 15,000 50Kw < x ≤ 100 Kw 12,500 25,000 100 Kw < x ≤ 200 Kw 25,000 40,000 200 Kw 40,000 55,000 7) Duty rates for three wheelers are as follows: i. Petrol - Rs.2,100 per cm3 ii. Diesel - Rs.1,250 per cm3 iii. Electric Unregistered (brand new) - Rs.7,500 per Kw Registered (used) - Rs.10,000 per Kw 8) Applicable duty will be revised for off-road electric sports vehicles classified under HS Code 8703.10.11, 8703.10.19,8703.10.21, 8703.10.29 to facilitate promotion of sports tourism 9)Vehicle permits for public sector employees 10) Upper ceiling of excise duty concession of vehicle permits for public sector employees will be defined in rupee value without changing the existing concession rate. 11) Upper ceiling of CIF value of imported vehicles will be removed 12) Restriction on transferability will be removed

Carbon Tax

Carbon Tax

Carbon tax will be imposed on motor vehicles based on the engine capacity.

Rate will depend on age and fuel type of vehicle as follows:

Type of vehicle Less than 05 years 05 to 10 years Over 10 years

Hybrid
(Petrol/Diesel) 25 Cts per cm3 50 Cts per cm3 Rs.1.00 per cm3

Fuel
(Petrol/Diesel) 50 Cts per cm3 Rs.1.00 per cm3 Rs.1.50 per cm3

Passenger bus Rs.1,000/- Rs.2,000/- Rs.3,000/-

Electric vehicles are exempted from the levy

Debt Repayment Levy

Debt Repayment Levy

Debt Repayment Levy (DRL) will be introduced on cash transactions by financial institutions

Rate is Rs.2/- per Rs.10,000/- cash transaction (i.e. 0.02%)

Levy will be charged on total cash transactions and should be paid by the financial institutions.

Luxury Tax on Motor Vehicles

Luxury Tax on Motor Vehicles

1) One-time payment luxury tax will be introduced in lieu of the present system of payment over 7 years

2) The present system will be continued for the vehicles already registered

3) Tax depends on the band of engine capacity or motor power of the vehicle as follows:

Super Luxury (Rs.) Luxury (Rs.) SemiLuxury (Rs.)

Dual purpose (Petrol/diesel) 2200cm3 250,000/-

Motor Car
Petrol 1800cm3 < x ≤ 2500 cm3 Diesel 2200cm3 < x ≤ 3000 cm3 Electric 200 kW < x ≤ 300 kw 500,000/- Petrol 2500cm3 < x ≤ 3500 cm3 Diesel 3000cm3 < x ≤ 4000 cm3 Electric 300 kW < x ≤ 400 kw 1,000, 00/- Petrol 3500cm3 < Diesel 4000cm3 < Electric 500 kW < 2,000,000/-

Applicability for Different Sectors

1) Supporting the use of Solar Power:

Tax benefits
The NBT and PAL will be exempted on machines and equipment including solar panels and, storage batteries which will be imported for the establishment of solar charging stations.

2) Credit schemes
Individuals, companies incorporated under the Companies Act, No. 7 of 2007, co-operative societies, farmers/fisheries societies engaged in agriculture, agro processing including drip irrigation, poultry,
canning, plantation and tourism industry, that will invest in technology for the generation of solar power to be used for their own operations, will be supported through the introduction of a loan scheme at a subsidized interest rate of 8%.

Supporting the conversion from Non-Bio Degradable Polythene to environmentally friendly alternatives: ( Budget Proposal Nos. 23 and 24)

The Government will bear 50% of the investment cost incurred on equipment and machinery by SME polythene producers when converting from polythene to environment friendly alternatives.

A concessionary Green Loan Scheme will be introduced by the Pradeshiya Sanwardena Bank (also known as the Regional Development Bank) to encourage local entrepreneurs to engage in manufacturing bags, packing materials etc. out of bio degradable materials such as banana fiber, palm leaves, coir, and bamboo.

3) The “Pavithra Ganga” initiative:

The companies that already discharge their waste into the Kelani River, lagoons and estuaries will be:
 supported in the next 5 years to invest in technology to ensure zero discharge of waste into these water bodies .
 eligible to utilize the “E- Friends” credit facility at a concessionary interest rate of 6-8%.

The CEA will issue relevant regulations and will strictly monitor this process.

4) Supporting the SME companies:
The SME companies will be companies incorporated under the Companies Act, No. 7 of 2007 and will have at least 10 shareholders each contributing at least Rs.10,000 in equity. These companies could engage in any business from agriculture to apparels to IT.

The support provided by the Government will include:
 provision of equipment and facilities such as storage facilities, planting and seeding equipment, weed removers,
boats, fishing nets etc.

 extension of leasing facilities from the State banks to these companies to purchase such machinery.
 provision of a letter of undertaking or a guarantee to the respective State bank for the equipment, and other facilities purchased and, to bear at least 75% of the lease cost on behalf of the company during the lifetime of the lease.

 make available the “Enterprise Sri Lanka Credit Schemes” to these companies.

 provision of technical support to incorporate companies, maintain books and records, negotiations with financial
institutions will be provided by the private sector consultants. Each company incorporated under this mechanism will have a consultant company to support and the cost of the company for consultations for a period of 36
months will be borne by the Government in full, while for a period of another 24 months the Government will bear 50% of such cost. An incentive package based on the performance of these companies will be made available to these
consultants.

 bear the hire purchase lease rental and the interest subsidies by the Government.

These facilities by the Government will be 10% above the norm for companies headed by women.

The above facilities for companies headed by differently abled will be 15% above the norm.

Financial and non-financial support such as transfer of technical knowhow, packaging and marketing of products or services etc. will be coordinated and provided by the Department of Development Finance at the Ministry of Finance and Mass Media.

5) Supporting the startups and the innovation culture:

The “Erambuma” Credit Scheme

 University graduates with viable business ideas are eligible to utilize the “Erambuma” credit facility.
 The maximum loan size is Rs. 1.5 million per idea per person.
 The interest is 100% subsidized by the Government and the repayment is fully guaranteed through a Government
guarantee.

6) The “IT Initiative”
 The Government will finance the “IT Initiative” by providing Rs. 3 billion over a period of 3 years.
 This initiative will provide both financial and non-financial support by way of grants, equity investments, credit facilities, mentoring, technical support etc. to:

 local startups

 attract foreign startups

 Small and medium IT companies with a turnover around USD 2-3 million per annum to at least double
their revenue in 3 years.

 create the enabling environment by supporting establishment of Incubators, the acquisition and
augmentation of skills and know-how in collaboration with the local universities etc.

 The Government will facilitate effective collaboration between the Universities and the Industry in the following
manner.
 The IT industry to be able to acquire and augment the skills set in line with the demand in collaboration with
the University of Colombo (UoC) and Moratuwa (UoM) and, the SLIIT. For example, if an IT company requires training of its employees, non-employees including undergraduates of Universities or Technical Colleges, the company
could collaborate with UoC, UoM or the SLIIT to design the required courses. The “IT Initiative” will bear a portion of the cost while the company will bear the balance. Those who successfully complete such courses will be employed by the companies.
 This will be operated through the EDB and be managed by a Board comprising mainly of experienced private sector professionals, investors and entrepreneurs.

7) The “I2I Initiative”
 The “I2I” aims to connect university graduates and NVQ 4 certified graduates for a registered patent or a viable business idea with the industry. (Industry will adopt the Innovator).
 The Government will bear:
 the monthly salary, i.e., 50% up to a maximum of Rs.50,000 per month for a period of 24 months, and
 the cost of patenting in Sri Lanka and counsel on patenting

8) Export Access Programme:
We will introduce an “Export Market Access Support Programme” targeting the extension of support to:
 local companies that already have exports of less than USD 10 million per annum.
 potential new entrants to the export market to better access the global value chains.

This programme will facilitate:
 meeting of the cost of compliance which includes the cost of provision of free samples, intellectual property registration,insurance and promotional costs undertaken overseas.

 meeting of the full or partial cost of rent of retail shop space or shelf space occupied by domestic brands that reach overseas markets for a maximum period of 36 months.

Product development assistance to exporters to develop new products or improve existing products to meet the export market standards and financial support will be provided through the “Enterprise Sri Lanka” Credit schemes.

This programme will be implemented through the EDB.

9) Supporting Tourism:
Homestay Programme:
 A credit scheme will be introduced to support home owners registered with the SLTDA to upgrade their houses to meet the standards required to be in the Homestay programme.

 The facility under the scheme up to a maximum of Rs. 5 million per person at an interest rate of 6%, with a maturity period of 10 years will be introduced.

10) Employment Preparation Fund:
An “Employment Preparatory Fund” will be established under the Ministry of National Policies and Economic Development and will be operated through the National Youth Corps.

This fund will finance vocational training courses that are required by the private sector. The courses will be designed in collaboration with the private sector and such courses may be conducted at institutions such as Hotel Schools, Nursing Schools etc.

Most of these courses will be short termed with duration of 3-6 months and at the successful completion, employment will be guaranteed by the private sector.

This fund will be further utilized to:
 pay a stipend of Rs. 3,500 per month for those following training courses up to a maximum duration of 6 months, and
 finance the cost of the training course, in full or partly.

The Government will further incentivize the private sector to employ these youth who successfully follow these training programme(s) by bearing the cost of the salary of an employee up to Rs. 6,000 per month for a period of 6 months and the partner employer will pay a further allowance of Rs. 10,000 per month.

11) Supporting the middle income earner to be a home buyer:

A concessionary loan scheme will be introduced by the National Savings Bank to facilitate first time middle income home buyers.

The following terms and conditions will be applicable in this regard.

 Maximum loan size Rs. 5 million

 Interest rate 7% per annum

 Tenure 7 years

SVAT System to Continue

Department of Inland Revenue announces that the Ministry of Finance has decided to continue the    SVAT system until such time the necessary legislation is in place. Therefore current SVAT system will continue to be in force as usual until further notice. However, Department of Inland Revenue has informed to the tax payers on 10th March 2017 that SVAT will be terminated with effect from 1st April, 2017.

Upper limit for 15% special interest to senior citizens’ deposits increased to Rs 1.5M

The upper limit to pay 15% special interest on fixed deposits maintained by senior citizens in the licensed commercial banks and the licensed Specialized Banks has been increased up to Rs.1.5 million from the current limit of Rs.1 million with effect from March 01, the Finance Ministry said. On the instruction of the Minister of Finance Ravi Karunanayake, Treasury Secretary Dr. R.H.S. Samaratunga has informed the Central Bank of Sri Lanka to notify all banks amending the previous circular in this regard. The present Government, under its 100- day programme, in the Budget – 2015 for the first time introduced a 15% special interest scheme for senior citizens’ fixed deposits up to one million rupees maintained by senior citizens over the age of 60 years.  Accordingly, the Government pays the difference between the 15% and the market standard interest rate offered by commercial banks. Treasury has incurred Rs 13,000 million for this purpose in 2016. As a result of this offer to senior citizens, the number of fixed deposits by senior citizens rose to 450,000 in 2016 from 91,000 in 2015, a statement said. The number of fixed deposits maintained by senior citizens is reported to have risen today to 500,000 since the Minister Ravi Karunanayake announced the continuation of the senior citizens deposits scheme which guarantees an interest of 15 percent for deposits with the increase of the upper limit up to Rs 1.5 million. Director General of Department of Development Finance said that with the increase of the upper limit, Treasury has to spend Rs.18,000 million to pay the 15% interest during this year Meanwhile, Finance Minister Ravi Karunanayake said that this Government introduced various facilities to assist senior citizens after 2015 as the ageing population is on the increase in the island. In addition to the 15% interest, which was introduced in the country for the first time in 2015, the benefit of Agrahara Insurance Scheme available for the public servants was extended up to 70 years for the benefit of those who are retiring from the public sector.  In the Budget 2017 the Minister Ravi Karunanayake announced the extension of the insurance cover for the full life time of the retiring public servants from this January.

Government decides to further reduce import duty on rice with immediate effect.

Government decides to further reduce import duty on rice with immediate effect.

The government has decided to further reduce the existing tax on imported rice with immediate effect. Accordingly, Special Commodity Levy on imported rice will be reduced to Rs.5 from Rs.15 with effect from midnight of January 27.

On the advice of His Excellency President Maithripala Sirisena and Honorable Prime Minister Ranil Wickremesinghe, Finance Minister Ravi Karunanayake has taken this decision in order to provide urgent relief to the people.

Special Commodity Levy has been reduced for imported varieties of brown raw rice, Nadu and Samba. However, the tax relief is not applied to Basmati varieties.

The government took this decision in response to the exploitation of consumers by certain unscrupulous traders who hoarded stocks and made fast money in the recent past.

Government decides to further reduce import duty on rice with immediate effect.

Government decides to further reduce import duty on rice with immediate effect.

The government has decided to further reduce the existing tax on imported rice with immediate effect. Accordingly, Special Commodity Levy on imported rice will be reduced to Rs.5 from Rs.15 with effect from midnight of January 27
.
On the advice of His Excellency President Maithripala Sirisena and Honorable Prime Minister Ranil Wickremesinghe, Finance Minister Ravi Karunanayake has taken this decision in order to provide urgent relief to the people.

Special Commodity Levy has been reduced for imported varieties of brown raw rice, Nadu and Samba. However, the tax relief is not applied to Basmati varieties.

The government took this decision in response to the exploitation of consumers by certain unscrupulous traders who hoarded stocks and made fast money in the recent past.

Capital Gain Tax

Capital Gain Tax (CGT) will be introduced with effect from 1st April 2017 at a rate of 10 percent.

Government consider Capital Gain Tax to be equitable as it bridges the income gap and assists the government initiatives in poverty alleviation

Corporate Income Tax

The corporate income tax rate is proposed to be revised to create a three tier structure of 14 percent, 28 percent and 40 percent. 

Income tax rate applicable on liquor, tobacco, betting and gaming, etc. will be continued at the rate of 40 percent.(it is uncertain whether the profits from lottery which was liable at the highest rate of 40% during the previous years of assessment will be continuously liable at the highest rate of income)

 

SMEs, Exporters of goods and services, Agricultural sector and Education sector will be subjected to the lower rate of 14 percent.

The SME category will be redefined in a rationalized manner. (The maximum turnover criteria of 750 mn which was used to determine the SMEs in the year of assessment 2015/2016 has been reduced to 500Mn.)

 

All others including banking, finance, manufacturing and trading will be subjected to income tax at 28 percent. (the reduced income tax rate which was applicable to various undertaking such as development of software, supply of labour, etc will be increased to 28%)

 

Income tax rate of 10 percent currently applicable on funds, dividends, treasury bills and bonds will be increased to 14 percent.

 

 

Remove the exemptions applicable on the income from the investment on listed securities, Dividends, Unit Trusts and other instruments.

 

Notional Tax Credit applicable on the secondary market transaction of securities also will be removed.

 

The period of depreciation of capital assets will be revised for Plant, and Machinery and buildings.

The rate of capital allowances will be revised as follows:

  • Plant, machinery or equipment – the present rates of 331/3 %, 50% and 100% will be revised as 20% (5 equal installments).
  • Buildings – the present rate of 10% will be reduced to 5% (20 equal installments).

 

 

Investment Incentives

  • 100% capital allowances will be granted on investment in fixed assets not less than USD 03 mn with not less than 250 employment.
  • 200% capital allowances will be granted if the investment with the same conditions referred to above is made in Northern Province.
  • 100% capital allowances and for the second year of commercial operation
  • 5% of the investment as a tax credit up to a maximum of tax payable , if such investment is not less than USD 05 mn with minimum 300 employment in any trade or business.

Specific concessions

Specific concessions will be announced for:

  • any investment not less than USD 100 mn with minimum employment of 500; or
  • any investment not less than USD 500mn . in any trade or business.

Concessions to exporters

  • A rebate will be given equal to 75% of the income tax attributable to
  • excess profit of 2016/17, where profits from exports in foreign currency increased over 15% or more in 2016/17 compared to 2015/16.

 

Incentive for Listing 

Tax incentives which are already given to encourage listings will be continued. The new firms that will list on the stock exchange in the year 2017/18 will be entitled to a grant of an amount equal to 25 percent of the total income tax paid by that firm for the last year prior to listing.

 

Revision of time bar provisions

Assessments

The present period to issue assessments of 18 months will be reduced to 09 months.

 

Appeals

  • The present period of 24 months to hear an appeal by the Commissioner General will be reduced to 06 months.
  • The present period of 24 months to hear an appeal at the Tax Appeal Commission will be reduced to 06 months.

 

 

 

 

Personal Income Tax

Individual income tax rate structure will be revised as follows:

(a) Profits and income from employment :

– Tax free threshold on employment will be increased from Rs. 750,000 to Rs. 1.2 mn per annum. The deduction for qualifying payments will be adjusted accordingly.

– Rates applicable on the second employment will be revised as follows:

If the payment does not exceed Rs 50,000/- per month at 10%;

If the payment exceeds Rs. 50,000/- per month at 20%.

 

(b) The progressive rate structure will be from 4% to 24% having the equal tax slabs of Rs 600,000/- each.

 

Removal of exemptions on profits and income from employment

The following exemptions on profits and income from employment will be removed:

– The present exemption on providing transport.

– Certain special allowances provided for special categories of public services.

 

Removal of other exemptions

(i) The present exemption on certain dividends and interest or profits from investment on listed securities (corporate debt securities etc.) and other instruments will be removed.

(iii) The present exemption on interest on savings accounts up to Rs.5000/-per month will be removed.

(iv)The present exemption on interest on deposits applicable to senior citizens will be  restricted to Rs. 1.5 mn per annum

Withholding Tax (WHT)

Interest Income

With Holding Tax (WHT) on interest income will be increased to 5 percent from the present level and the exemption applicable on savings account with less than Rs. 60,000 per annum will be removed.

 

Specified Fee

WHT will be re-introduced on specified fees where the payment exceeds Rs. 50,000 per month.

P.A.Y.E. (Tax on Employment Income)

  • PAYE rate schedule will be revised in line with the personal income tax rates
  • All the exemptions applicable on various categories will be removed.
  • The tax free threshold of 100,000 per month will be available for every employee on their employment income.
  • The income from the secondary employment up to Rs. 50,000 per month will be liable for PAYE at 10 percent and if it is more than Rs. 50,000, the tax will be at the rate of 20 percent.
  • The PAYE of the employees of state owned enterprises and other government institutions should be deducted from the employees‟ emoluments and should not be paid by the institution.

Economic Service Charge (ESC)

Economic Service Charge ( ESC) [Amendments to ESC Act No 13 of 2006]

 

The present threshold will be reduced from Rs 50mn per quarter to Rs 12.5 mn per quarter.

 

Advance WHT of ESC will be introduced on import of vehicles.

 

The proposed changes in Budget 2016 (subject to subsequent modifications) will be implemented together with the proposals listed above.

Value Added Tax (VAT)

SVAT

Proposed to remove the SVAT scheme as it could hardly be called simple. It has become redundant with an efficient and smoothly operational technology driven VAT administration process brought about by the IRD automation system.

 

VAT Exemptions

Plants, machinery and accessories for renewable energy generation identified under the following H.S Code Nos.

8454.10, 8501.31.10, 8503.00.10, 8503.00.20, 8503.00.90, 8504.10.10, 8504.10.90, 8504.21.10, 8504.21.90, 8504.22.10, 8504.22.20, 8504.22.30, 8504.22.90, 8504.23.90, 8504.31.10, 8504.31.90, 8504.32.10, 8504.32.90, 8504.33.10, 8504.33.90, 8504.34.90, 8504.40.10, 8504.40.20, 8504.40.30, 8504.40.90, 8504.50.10 , 8504.50.90, 8504.90.10, 8504.90.90, 8513.10.10, 8539.31.20, 8541.40, 9032.89.10, 9405.10.10, 9405.10.20, 9405.20.10, 9405.20.20, 9405.40.30, 9405.40.40

 

Plant and Machineries imported by CEB for generation, transmission and distribution will be exempted from VAT.

 

Exempt the provision of geriatric care and child care services

 

Certain electrical goods identified under HS Code Nos

8516.40 8516.72 8527.21 8527.29 8527.91 8527.92, 8528.72.41 8528.72.9,9101.11 9101.19 9101.19.10 9101.19.90, 9101.21 9101.29 9101.91 9101.99 9102.11 9102.12, 9102.19 9102.21 9102.29 9102.91 9102.99 9105.11, 9105.19 9105.21 9105.29 9105.91 9105.99

Magazines, journals or periodicals other than newspapers, identified under HS Code Nos 4901.10, 4901.91, 4901.99, 4901.99.10, 4902.10.10, 4902.90.10.

Medical Machinery and medical equipment identified under the HS Code No.8421.29.10 136

 

The following exemptions will be removed :

– Gold coins, precious metals and precious stones identified under following HS Codes Nos.

7101, 7102, 7103, 7104, 7105, 7106, 7107, 7108, 7109, 7110, 7111, 7113, 7114, 7116, 7118.90.10 .

– Import or supply of jewellery.

– Locally manufactured milk powder.

 

VAT Refunds at Ports & Airport

  • A refund mechanism at ports and airports will be introduced for foreigners who stay not more than 30 days in Sri Lanka on the VAT paid by them in purchasing goods in Sri Lanka.

 

  2017 Budget Proposals – VAT, PAL, NBT Liables and Exemptions

 

 

 

Nation Building Tax (NBT)

Nation Building Tax (NBT) [Amendments to NBT Act No.9 of 2009]

 The following exemptions will be removed:

– any goods required for the purpose of providing of services of international transportation, being goods consigned to Sri Lankan Air Lines Ltd, Mihin Lanka (Pvt) Ltd or Air Lanka Catering Services Ltd.

– any article imported or sold by any society registered under Co- operative Societies Act, No. 5 of 1972 or under the respective statutes enacted by the Provincial Councils providing for such registration or Lak Sathosa Limited registered under the Companies Act, No. 7 of 2007.

– the services of a travel agent in respect of inbound tours, if such person is registered with the Ceylon Tourist Board.

– services being construction services including the services of sub-contractors.

– sale of residential apartments.

– services provided by any society registered under the Co-operative Societies Law No. 5 of 1972 or under any Statute enacted by a Provincial Council, or Lak Sathosa Limited, registered under the Companies Act, No. 7 of 2007.

 

The following will be exempted:

– International telecommunication services provided to local operators by External Gateway Operators.

– printed books, magazines, journals or periodicals other than newspapers, identified under HS Code Nos 4901.10, 4901.91, 4901.99, 4901.99.10, 4902.10.10, 4902.90.10.

– Solar panel modules and accessories under the following HS Code Nos. 8454.10, 8501.31.10, 8513.10.10, 8539.31.20, 8541.40, 9032.89.10, 9405.10.10, 9405.10.20, 9405.20.10, 9405.20.20, 9405.40.30, 9405.40.40

 

  2017 Budget Proposals – VAT, PAL, NBT Liables and Exemptions

 

 

 

Financial Transactions Levy (FTL)

Proposed to introduce a new levy called FTL as a contribution for social development at the rate of Rs. 5 per Rs.10,000 on the total 86 cash transactions including easy cash by banks and other financial institutions. FTL will be treated as expenditure for income tax purpose.

Telecommunication Levy

  • Telecommunication Levy on internet services will be increased to 25 percent par with the other Telecommunication services.

 

  • In support of the country‟s digitalization process, all mobile telephone operators will be given a 6 months period to convert their infrastructure to provide at least 3G coverage. Any operator who failed to implement within this period will be liable for a surcharge of Rs.100 million per District. All metro areas are required to be converted to 4G by 30th June 2018.

 

  • SIM Card Activation Levy (SCAL) of Rs. 200 per SIM to be charged to discourage the use of mobile connections temporary for fraudulent and criminal activities.

 

  • Increase the Annual Spectrum Licensee Fee by 25 percent, with effect from January 1, 2017.

 

  • The services provided by the external gateway operators to local operators will be exempted from VAT and NBT.

Taxes on Liquor

  • The fool proof sticker system announced in the last Budget will be introduced soon with the view of controlling the illicit liquor circulation in the country and to control the leakages. The bidding process is completed and sticker system will be implemented in 2017.

 

  • Proposed to reduce the evaporation allowance of ethanol for the production of liquor from 1.5 percent to 0.15 percent. The evaporation in storage and transport is reduced due to technological enhancement and this percentage has not been revised for nearly ten years.

 

  • Proposed to introduce Excise Duty on the quantum of raw materials used for producing ethanol. This would help reconciling the actual amount of production of ethanol.

 

  • To provide a better price for locally manufactured spirits, Duty on imported ethanol will be upwardly revised and proposed to introduce Excise Duty of Rs. 25 per liter for imported non-potable liquor for giving further assistance to local manufacturers.

 

  • Excise (Special Provisions) Duty will be introduced on the importation of beer can at the rate of Rs.10 per can of not more than 325 millilitre and Rs. 15 per can of more than 325 millilitre.

Carbon Tax

Carbon Tax will introduce for all carbon fuel run motor vehicles. The emission test fee also will be included in the Carbon Tax. The Department of Motor Traffic will be the collecting authority of the Carbon Tax. The cost of emission test of a vehicle will be reimbursed to service provider by the Department. The vehicle owners need not to pay an additional fee for the emission test.

Taxes on Motor Vehicles

  • Budget 2016 introduced the engine capacity based unit rate method for Excise Duty calculation for motor cars. Therefore, proposed to extend the engine capacity based Excise Duty to Motor Cycles as well.
  • Government is committed to encourage green energy consumption and proposed to reduce Excise Duty on electric cars with motor power less than 100 KW.
  • To support local industries the age limit for importing lorries and refrigerated trucks of capacity over 5 Metric Tonne to be extended to 10 years.
  • Several duty revisions to correct anomalies in the duty structure will also be made. These changes will be implemented with effect from 11th November 2016.
  • With regard to motor vehicles, passenger safety is of paramount importance. As an initial step to encourage safety, I propose to set 88 motor vehicle standards of SRS, air bags, ABS and three point seat belts will be made compulsory for motor cars to ensure the road safety.
  • Vehicle Entitlement Fee (VEF) is paid at the time of opening of LCs, to the banks and proposed to change this procedure. This Fee will be paid at the Sri Lanka Customs at the time of clearance of the vehicle. Upon payment a certificate with details of the imported vehicle will be issued.
  • Proposed tax incentive on exporting vehicles which are more than 5 years old. Any export of not less than USD 200,000 that constitute minimum of 20 vehicles will be granted an Excise Duty waiver of 50 percent from the payable duty for importing a motor car with CIF value not exceeding USD 50,000.

Other Fees and Levies

Charge for Court Cases/ Case Filing Fee

High volume of cases pending before the Courts is an overriding problem in the entire court system. Excessive caseloads cause delays in processing cases and deny the justice. And it causes a heavy burden to the government.

Charge a filling fee when filling a Court case by any person in any Court.

 

Increasing fines charged on traffic offences

Proposed to increase fines charged on traffic offences and to increase the minimum fine to Rs. 2,500.

To address the overload of cases in the Magistrate Courts, proposed to amend the Motor Traffic Law to impose spot fine on offences which are currently be fined only by Courts. A system will be introduced for the errant motorists to pay their traffic fines through mobile phones.

 

Visa fees will also be revised.

 

Teledrama Levy (TL)

Teledrama Levy applicable on the foreign tele drama dubbed in Sinhala, Tamil or any other language will be increased.

 

Beedi Leaves Import license

Proposed to issue licenses to import beedi leaves by charging an annual license fee of Rs. 5 million.

 

Import License Fees

mport licenses will be issued at a fee to import lubricant, bitumen and gold

 

Annual License Fees on Firearms

Annual License Fee of Rs. 20,000 will be imposed on firearms. Firearms which are used for agricultural purposes are excluded from this fee. Any person who uses firearms without obtaining or renewing such license paying the fee will be liable for Rs. 5 million penalty.

 

Tax on Import of Books

Books, magazines and journals other than exercise books will be exempted on PAL, NBT and VAT.

 

Lubricant Business Registration Fee

Bi-annual registration fee payable on lubricant agreements by the lubricant businesses will be revised to Rs. 2.5 million or 0.75 percent of total invoiced sales whichever is higher with effect from 1st January 2017. Proposed to remove the presently applicable upper ceiling

Tax on Online Transactions

With the development in technology, online transactions have now become very popular. This has become a method to bypass the formal taxes and charges that is otherwise applicable in trade and financial transactions. This results in significant revenue leakages to the government given that taxes are not properly charged at the points of port, airport and the post office and courier services when such goods enter the country. As such, ICTA will create a common platform to facilitate online firms such as amazon, ebay, etc to be able to collect taxes on behalf of the government for transactions carried out within Sri Lanka. This common platform will be monitored by the General Treasury.

Reforms in Tax Administration – IRD & Customs

Inland Revenue Department
• Redrafting of Inland Revenue Act will be completed and policies for higher compliance and broadening the base will be incorporated. Anyone who will avoid or violate will be dealt stringently. Tax Manual also will be published.

• E-commerce presents a major challenge for tax administration, given the multijurisdictional nature of transactions. A mechanism will be developed to tax these transactions.

• IRD Administration will be decentralized to allow the tax authorities to be closer to the tax payer. Collection of taxes, fees and levies will be ensured by the deployment of IRD officers on electoral basis. A revenue monitoring unit will be established in the General Treasury.

• Revenue are collected through the officers already deployed at Divisional Secretariats.

• RAMIS will be fully implemented and a virtual office setup which allows no physical interface between IRD officials will be formed.

• The time frame for assessments, appeals and Court proceedings will be reduced and the Tax Appeals Commission will be strengthened by increasing the membership and filling vacancies.

• VAT Law enacted in 2002 has not been consolidated thereafter leaving the provisions difficult to be understood by users. Therefore steps will be taken to consolidate the VAT Act incorporating amendments up to date.

• Post refund audits upon obtaining bank guarantee, will be implemented in order to minimize delays in the VAT refund process

• Smart e-invoice devices will be introduced to be used at the point of sale by the VAT registered persons. This will make the VAT collection process more simple and efficient. This system will be extended to the Excise Department as well.

• National Tax Council will be established and the Office of Tax Ombudsman will be created by an Act of Parliament to resolve grievances of tax payers with the view to increasing tax payer confidence in the tax system and to avoid litigations.

• Steps will be taken to ensure the benefits and recognition proposed in the previous Budget are given to the privileged tax payers and three types of privilege cards, Platinum, Gold and Silver will be issued for them.

 

Sri Lanka Customs (SLC)

• Registration of all importers with the Customs Department, so as to grant them with appropriate levels of facilitation in the clearance process. This will be effective from 1st January 2017.

• Create risk profiles of importers which will help the low risk importers expeditious clearance.

• Pre arrival processing – submission of import documentation and information, including Manifest for processing before the arrival of the goods will ensure faster clearance and release once the goods reach the port. This will ensure just in time delivery of goods for compliant importers.

• Average time of clearance and release – in order to ensure predictability Customs Department will endeavor to publish average processing time of imports and export documentation and average release time of goods. The Customs Department will ensure that export documents and containers will be processed by the Department of Customs for shipment within 2 hours from the time of submissions at the exports facilitations Centre. Ensure that the documentation pertaining to imports will be processed in 3 hours and the containers released within 24 hours.

• Dry-port clearance – We will also explore the possibility of establishing dry ports on PPP basis.

• Valuation database – Customs value of imported goods for duty purposes are based on the transaction value as per the WTO Valuation Agreement. Thus in order to ensure uniform application ascertaining the actual transaction value of imported goods, Customs Department will establish a valuation data base with effect from 1st January 2017, for about 700 commonly imported goods with corresponding minimum values, which can be used as reference values to process clearance of imported goods.

• Advance Rulings – In order to ensure predictability of taxes payable on importation, Customs issues advance rulings, which will now cover origin of goods as well.

• Compliant Traders to be rewarded- Customs will accord the green channel facilities for documentary checks and documentary and goods examination to compliant traders.

• Publication and availability of information – in order to ensure transparency in Customs practices and procedures, the Customs Department will establish and implement a National Trade Information Portal in Sri Lanka.

• Single Window – Customs has already taken the initial step of enabling traders to submit documentation or data requirements for importation, exportation or transit of goods electronically through a single entry point to the participating authorities or agencies.

• Installing a Container Scanning system at the Ports and the airport to ensure, effectiveness and efficiency of the container and baggage clearing process, which will minimize delays and enhance government revenue collection.

• To curb smuggling activities through sea, the Customs Department will reactivate the Marine division. As such to strengthen Customs allocate Rs.250 million to procure 6 new Sea Patrol crafts.