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Value Added Tax

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12% of Value Added Tax rate is applicable in Sri Lanka with effect from 1st January 2011 other than zero rate.

 

 

Value Added Tax exemptions as at 1st January 2011

 

VAT exempt supplies

 

 

i. Food items – rice, rice flour, wheat, wheat flour, fresh coconuts, tea (including green leaf), locally produced sugar, cardamom, cinnamon, cloves, nutmeg, mace, pepper, desiccated coconut, bread, any powdered milk, liquid milk, eggs, local supply of imported dhal, dried fish, chillies, sugar, canned fish, chickpeas, green gram, potatoes and onions, locally manufactured coconut oil, specific high protien and high energy agro foods manufactured out of grain cultivated in Sri Lanka, free or subsidized meals provided to an employee, prawns, unprocessed agricultural or fishing products, locally produced dairy products out of locally produced fresh milk, locally produced rice products containing rice produced in Sri Lanka. (above imports will also be exempt wherever applicable)

 

(a) ii. Other items – paddy, seed paddy, other agri. seeds and plants, rubber, latex, unprocessed agricultural or horticultural products, pharmaceutical products and drugs (other than cosmetics) and raw materials for such products, ayurvedha, unani, siddha or homeopathic preparations (other than cosmetics) and raw materials for such preparations, pearls, diamonds, precious or semi precious stones precious metal gold coins, books (Other than Cheque books, periodicals, magazines, newspapers, diaries, ledger books and exercise books), unused postage & revenue stamps, cellular mobile phones, shrimp feed, prawn feed, animal feed other than poultry feed, crude petroleum oil, kerosene, aviation fuel, specified fuel oils, oil for ships, LP gas, diesel, various items used by disabled persons including blind, educational services by an educational establishment or government school or school funded by the govt., or school registered with the ministry of education that follow the govt. curricula, public library services, public passenger transport services (other than air transport, water transport, tourist transport, excursion tours, taxi services) electricity, free or subsidized transport provided to employees using a motor coach, burials and cremations, services consumed out side Sri Lanka and paid in rupees, specific financial services, sale, lease or rent of residential premises other than by certain BOI companies, all health care services provided by medical institutions or recognized medical professionals, unprocessed timber logs, sea sand, films including distribution or exhibition, local handloom products, chartering of any vessel, replacement of a bus by a permit holder, finished leather imported for shoe manufacturing, finance leasing for passenger transport buses with 28 or more seats under an agreement prior to 01.01.2004 or for any three wheeler or any bus (imported) replaced by a permit holder, clay roof tiles or chemical naptha manufactured in Sri Lanka, rattans, fertilizer, yarn for textile industry, dyes for hand loom industry, laboratory facilities for production of films, import of personal items or samples worth not more than Rs. ten thousand, rattans. Coal, Petrol specified under HS Code 2710.11.20, Bitumen, Hybrid and electronic vehicles, taxi meters, Articls use for Fashion Jewellery manufacturing. (above imports will also be exempt where ever applicable)

 

iii.  Plant, machinery etc. (Import or supply)  air crafts, helicopters, agricultural tractors and machinery, machinery for construction industry imported not later than 31.12.2008, milk processing machinery, computers and accessories, machinery for handloom industry, machinery for rice milling, approved media equipment etc. Ships, plant and machinery for new undertakings out side Colombo and Gampaha districts approved under the Inland Revenue Act, high value plant, machinery etc and exhibition materials etc re-exported after the completion of the project or event. Solar panel modules, accessories or solar power energy, high tech medical equipment or any machinery used for the manufacture of ticket issuing machinery, high-tech machinery & equipments for leather or footwear industry, high-tech medical, laboratory and educational equipments. Agricultural machinery and parts, certain electrical equipments,

 

 

iv. Plant, machinery etc. – (imports only) – air craft engines and spare parts, capital items for approved vocational or practical training institutions, project goods, during a period of 3 years for any undertaking approved by the CGIR where the capital investment in not less than Rs. 100.M, samples for garment industry, machinery and equipment for electricity generation and distribution, machinery for modernization of factories, poultry keeping machinery, poultry incubators and brooders, plant & machinery for undertakings in the Eastern Province approved under section 24C of the Inland Revenue Act and cattle, buffaloes, poultry, pigs, goats or sheep for breeding purposes and the seimen and embryos of such animal for breeding purposes. buses on or after 9/7/2008 to replace the buses destroyed due to terrorist activities, brass sheets, brass ingots, thread, dyes, paraffin wax and shellac for the manufacture of brassware by the National Craft Council with the approval of Ministry of Rural Industries and Self Employment promotion, chemical naptha by the Ceylon Petroleum Corporation to be supplied to Ceylon Electricity Board for the generation of electricity, packing materials exclusively use of packing pharmaceuticals manufactured in Sri Lanka, Cine films, cinematographic films exposed or developed, magnetic cine sound recorders, cinematographic cameras and projector parts and accessories, apparatus and equipments for cinematographic laboratories, electrical filament or discharge lamps and lamp carbon, Goods to any infrastructure development project funded through foreign loans or donation directly to government ministries, machinery and high tech equipments for the use of telecommunication industry, Air craft stimulation and parts

 

 

v.  Special Cases

 

§ Diplomatic missions or other organizations within Diplomatic Privileges Act No. 9 of 1996 – any import of goods or local

 supplies of goods or services to such missions, organizations and identified personnel.

 

§ Goods within Passenger’s Baggage (exemptions) Regulations.

 

§ Ex-bond ship stores.

 

§ Imported medical machinery, medical equipments or an ambulance donated to approved organization from abroad for the

 relief of sudden distress.


 § BOI projects – Agreement prior to 16.05.1996, or prior to 01.04.1998 with project cost not less than Rs. 500m – import of

 project related goods (other than negative list items) during the project implementations period; or  Projects which will

 make exempt supplies – import of project related goods (other than negative list items) until the completion of the project

 

§ Importation of any film produced in Sri Lanka and sent abroad for further processing or printing.

 

§ Import and supply of goods at duty free shops for payment in foreign currency.

 

§ The supply of locally manufactured goods to duty free shops for payment in foreign currency.

 

§ The supply of goods or services by any strategic development projects.

 

§ The supply of goods or services to any strategic development project or any special project identified by the Minister of

 Finance.

§ Import of goods for any strategic development Project or any special project approved by the Minister of Finance.

§ The supply of goods or services by any registered co-operative society.

§ The supply of services by Tower Hall Theatre Foundation and by Central Cultural Fund.

§ Supply of locally manufactured machinery used for tea industry and indentify by Tea Board

§ Locally manufactured Surgical Gauze

§ Locally Manufactured Jewellery

· The supply of Construction work of Gama Naguma, Maga Naguma, Samurdhi and community irrigation projects carried out through the participation of the  Community


· The Supply of Telecommunication Services, Locally manufactured briquettes and pallets using bio mass wastes, Locally developed software, Leasing Facilities for motor coach with seating capacity not less than 28 passengers seats and used for public transport services, Lorries or Tractors, Goods or service to any infrastructure development project funded through foreign loans or donations directly to Government Ministries, Goods or services by an institution set up by the Ministry of Defense for the rehabilitation of disable soldier, Services being receipt from re – insurance by any local insurance company by way of commission or compensation in an insurance business, services being issue of licenses to local telecom operators by Telecommunication Regulatory Commission. (w e f 1st January, 2011)

 

 

V A T Registration

Temporary Registration
Following information will be required to open a temporary VAT file along with Form No. 12 issued by VAT Department

Registration of Limited Liability Company

Certified copy of

  • Business Incorporation Certificate
  • TIN (Tax Identification Number) Certificate
  • Copies of  Original Performa Invoice or fax copy of  Invoice
  • Bill of Lading
  • Copies of National Identity Card/s of Directors

Registration Partnership or Sole Proprietorship

  • TIN Certificate issued by Inland Revenue
  • Certified Copies of Business Registration (BR)
  • Copies of Identity Card of Partners
  • Copies of Performa Invoice or Fax copy of Invoice
  • Bill of Lading

Registration of an Individual

  • TIN Certificate issued by Inland Revenue
  • Copy of National Identity Card
  • Copies Original Performa Invoice or Fax copy of Invoice
  • Bill of Lading

PERMANENT REGISTRATION

Registration Requirement with effect from 1st January 2013

  • Taxable supply should exceed Rs. 3,000,000. 00 in any taxable period of one month or three months or
  • Taxable supply should exceeds Rs. 12,000.000.00 for any twelve months period

Limited Liability Company
Certified copy of

  • Article of Association
  • Business Incorporation Certificate
  • Form  1
  • TIN (Tax Identification Number) Certificate
  • Commercial Invoices for three months
  • Bank Statements as a proof for deposit of sales
  • Copies of National Identity Cards of all Directors

Partnership or Sole Proprietorship

  • TIN Certificate issued by Inland Revenue
  • Certified Copies of Business Registration (BR)
  • Copies of Identity Card of Partners
  • Commercial Invoices for three months
  • Bank Statements as a proof for deposit of sales

An Individual

  • TIN Certificate issued by Inland Revenue
  • Copy of Identity Card
  • Commercial Invoices for three month
  • Bank Statements as a proof for deposit of sales
 

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