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Harsha finds many drawbacks in VAT system, ‘including lot of confusion even at highest echelons’
By Rathindra Kuruwita
There is a lot of confusion over the amendments to the Value Added Tax (VAT), and it will take a long time for the authorities to address the teething problems in the relevant software systems, Samagi Jana Balawegaya (SJB) MP, Harsha de Silva says.
Dr. de Silva pointed out that there was still a lot of confusion even at the highest echelons about the amendments to VAT. “Even the Colombo Tea Auction was suspended because they have no idea as to how VAT would affect their operations. We also need to ensure that the software at the IRD is ready. I think we will take some time to address technical issues that will arise,” Dr. De Silva said, noting that the amendment to the VAT regime was not that complicated. Goods and services that were taxed at 15 percent have been increased to 18 percent. Moreover, 97 items that were exempt from VAT previously were now subjected to VAT, he said.
“But people need to be better educated on how they should pay VAT. A company that has a turnover of over Rs 60 million a year must be registered for VAT. So, people might wonder if they have to pay VAT, if they buy a milk packet or an exercise book from a supermarket and whether they do not need to do so when they buy one from a roadside shop,” Dr. de Silva said.
“It is obvious that traders are taking advantage of this confusion,” he said, adding that traders were only acting as an agent for the government when they collected tax from the consumer.
“They can’t pocket the money so collected. They have to hand over that money to the state. There are also many issues in the efficiency in collecting taxes by government agencies. These loopholes will allow corrupt businesspeople to manipulate the VAT system,” he said.
The SJB MP added that Sri Lanka had a history of VAT frauds. Those between 2002 and 2004 had cost the Inland Revenue Department dear, he said.
“The government said that from 01 January 2024, everyone over 18 had to obtain a Tax Identification Number (TIN), which had to be produced when opening a bank current account, securing approval for a building plan, registering a motor vehicle or renewing a revenue licence, and registering land or a title to land by the buyer. The government informed us so in November. But this week the government has given a one-month grace period. So it’s obvious that the government has not done enough to ensure compliance,” Dr. de Silva said.
The coming year would be extremely difficult for the average Sri Lankan given the government’s target to double the revenue from VAT compared to the previous year, he said.
The government was planning to collect about Rs 1,400 billion from taxes in 2024, he said.In 2023, the government had sought to rake in about Rs 700 billion from VAT, Silva said.
“So, the government is planning to collect double that amount in the current year. It is obvious that the average Sri Lankan family would be severely affected by the enhanced VAT,” he said.
“Before 01 January 2024, the VAT was not imposed on diesel and petrol. The government has imposed an 18 percent VAT on them. These products were subjected to the Ports and Airports Development Levy (PAL) of 7.5 percent before, and this levy has been repealed. So, the actual increase in taxes due to the application of VAT to diesel and petrol is 10.5 percent.”
The SJB MPs said that there were Sri Lankan companies that produced software for Sri Lankan companies. Their products were now subjected to VAT. But if the software came from overseas it was not subjected to VAT, he said.
“This is a big problem. We must help the local companies. We, members of the Committee on Public Finance, tried our best to resolve this issue. Our proposal was that the government must not consider where the software originated from. We asked it to consider where the software was used. If the service is used in Sri Lanka, it should be subjected to VAT. The President then asked the Treasury Secretary to implement our proposal,” he said.
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It is our collective responsibility to build a nation grounded in unity and strength – President
President Anura Kumara Disanayake in his Maha Shiva rathri message said that it is our collective responsibility to build a nation grounded in unity and strength.
The full text of the message issued by the President’s media division:
Maha Shiva Rathri is a sacred and joyous occasion celebrated by Hindu devotees across the world in reverence of Lord Shiva. This divine night marks the celestial union of Lord Shiva and Goddess Parvati, as well as the powerful Tandava, Shiva’s cosmic dance of creation and destruction. It symbolises the triumph of wisdom over ignorance, dispelling the darkness of illusion and lighting the path to enlightenment.
On this auspicious night, Hindu devotees observe fasting and engage in spiritual practices, praying for the darkness of ignorance to be replaced by the radiance of wisdom. It is also a time to seek divine blessings for prosperity, peace and fulfilment in life.
The union of Shiva and Parvati is a profound representation of knowledge and power coming together. It reminds us that breaking free from the illusions of division allows us to embrace the truth with open eyes. Today, as we stand at the dawn of a new era, this message is more relevant than ever. Let us tear down the barriers that have kept us apart for generations and unite as one, casting aside discord and embracing togetherness. This is a moment to nurture interfaith harmony, celebrate our diversity and move forward with love and mutual respect, dedicating ourselves to the progress of our beloved motherland.
As we journey towards a brighter future, it is our collective responsibility to build a nation grounded in unity and strength. We are stepping into a time of transformation, embracing political, economic and social renewal, shaping a future that holds promise and hope for all.
On this sacred night, as the glowing lamps of Maha Shiva Rathri illuminate our surroundings, let them also illuminate our hearts, guiding us with unwavering faith along the path we have chosen. Let us walk forward together, hand in hand, in the spirit of peace, unity and shared prosperity.
By Saman Indrajith
Finance and Planning Deputy Minister Dr. Harshana Suriyapperuma told Parliament yesterday (25) that SriLankan Airlines was in debt due to political interference under previous governments.
Answering a question raised by Anuradhapura District SJB MP Rohana Bandara, Dr. Suriyapperuma said that such interference had resulted in an ongoing case in international courts.
Dr. Suriyapperuma stated that SriLankan Airlines had earned notoriety for corruption not only here but also abroad.
“Currently, there is an ongoing case in an international court over claims that commissions were sought in respect of the purchase of aircraft. Aircraft have been leased at exorbitant rates, far beyond prevailing market rates,” he said, adding that the actions and decisions of past regimes over the last few decades regarding SriLankan Airlines must be taken into account when examining its debt.
Outlining the measures taken by the government to tackle the staggering debt, the Deputy Minister of Finance said that a five-year programme would be implemented from 2025 to 2030.
Dr. Suriyapperuma explained that despite the allocation of Rs. 20 billion from the 2025 Budget for SriLankan Airlines, the funds would not be utilised for the airline’s operational expenses. Instead, the management had been tasked with transforming it into a self-sustaining entity. Discussions had already begun with relevant stakeholders to restructure the debt, which includes loans obtained in US dollars.
Dr. Suriyapperuma revealed that SriLankan Airlines had been paying USD 900,000 per month in installments for three aircraft that had remained unused for several years. He added that the national carrier currently owned a total of 22 aircraft and employed 3,194 staff members in its main airline operations, along with 2,862 employees in its strategic business units.
Dr. Suriyapperuma also highlighted that the Ministry was currently evaluating those plans, with the expectation of achieving operational profitability and securing government support within the five-year period.
Suriyapperuma assured that measures would be taken to address SriLankan Airlines’ debt without burdening the public.
… Easter Sunday carnage suspects among them
The government has issued a gazette extending the ban on several Tamil diaspora groups, alleging they supported “terrorism-related activities,” The Tamil Guardian has reported.
The gazette, signed by Defence Secretary Air Vice Marshal (retd.) Sampath Thuyyakontha, declared that these organisations have “repeatedly provided financial support for terrorism.” As a result, their financial and economic assets remain frozen, and Sri Lankans are prohibited from having any contact with them. Those that do risk being arrested.
The list also reaffirms the ban on 222 individuals allegedly linked to terrorism.
The organisations blacklisted by the Sri Lankan government include:
* Liberation Tigers of Tamil Eelam (LTTE)
* Tamil Rehabilitation Organisation (TRO)
* Tamil Coordinating Committee (TCC)
* World Tamil Movement (WTM)
* Transnational Government of Tamil Eelam (TGTE)
* World Tamil Relief Fund (WTRF)
* National Council of Canadian Tamils (NCCT)
* Tamil Youth Organisation (TYO)
Other organisations listed include several linked to Islamic groups, such as the National Towhead Jema’ah (NTJ) and the Sri Lanka Islamic Student Movement (SLISM).
The Tamil Guardian reported that successive Sri Lankan governments have used terrorism laws to ban Tamil organisations that continue to function openly and legally in the United States, United Kingdom, Canada, and throughout Europe. This ban, however, stifles links between these diaspora organisations and Tamils, making it a criminal offence for Sri Lankan citizens to maintain contact with them.
The reposition of the ban follows a pattern seen in previous years. In 2024, Sri Lanka renewed its prohibition of Tamil diaspora organisations, days after India extended its own ban on the LTTE. The move was widely condemned as politically motivated and an attempt to justify Sri Lanka’s military presence in the “Tamil homeland”.
It is our collective responsibility to build a nation grounded in unity and strength – President
Fairly heavy showers above 75mm can be expected at some places in Eastern and Uva provinces and in Matale, Nuwara-Eliya, Polonnaruwa, Galle, Matara, Kalutara and Rathnapura districts.
USD 900,000 paid monthly for three unused SriLankan aircraft– Dy. Finance Minister
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