Key government departments come together to convince no challenges will follow VAT

• Say sentiments expressed in life becoming challenging from January 1 are mere misconceptions
• Point out there will be “some additional expenses” resulting from tax reform but not as significant as some are suggesting
• Assert government is actively taking measures to alleviate burden on public 

The key government departments came together this week to convince the public that there will be no new challenges with the upcoming changes in the Value Added Tax (VAT).
Alongside the Finance Ministry, the senior-most officials of the Inland Revenue Department, the State Revenue Unit of the President’s Office and the Economic Research Department of the Central Bank of Sri Lanka came onto one platform to give assurance to the business community and public that higher cost of living and operations will not come with the dawn of the new year.
The representatives of the relevant authorities and departments maintained that the consumers need not worry as much since the VAT changes would not result in negative implications, despite the claims made in recent weeks.
Finance Ministry Tax Policy Advisor Thanuja Perera addressing a press conference on Thursday said that the sentiments expressed in life becoming challenging from January 1 are mere misconceptions.
“It is important to clarify that while there will be ‘some additional’ expenses resulting from the tax reform, they may not be as significant as some are suggesting.
The government is actively taking measures to alleviate the burden on the public by eliminating other taxes imposed on goods and services subject to the VAT and making appropriate tax adjustments,” said Perera.
Providing an example, she pointed out that to mitigate the impact of the VAT increase, “positive measures” are being implemented, which include the removal of the port and airport taxes on specific imported goods.
According to President’s Office State Revenue Unit Director K.K.I. Eranda, when comparing inflation forecasts before and after the tax revision estimated by the Central Bank, it is projected that inflation would increase by 2-3 percent, due to the rising prices.
However, the Finance Ministry and Inland Revenue Department are actively working to provide relief by removing other taxes on goods and services subject to VAT and making the necessary tax adjustments, he said. 

“As a result, there is a possibility that the predicted rate of increase in inflation may decrease further.”
Edirisinghe went on to stress that the monthly expenses of a family cannot increase by Rs.40,000 in January compared to December, asserting that the statements suggesting otherwise are false.
Contributing to the dialogue, President’s Office State Revenue Unit Director General M.J. Gunasiri noted that despite the challenges posed by the taxes imposed in 2023, efforts have been made to ensure the provision of essential services to the public without any shortcomings. He went on to assert that if the individuals or businesses are unreasonably increasing the prices of goods, both the government and public have the means to take the necessary measures in response.