Policy Statement in Parliament Govt. to revise VAT percentage to further support economic growth: President

Pix by Pradeep Pathirana 

• Despite the 1.9% Gross Domestic Product (GDP) deficit in 2022, Sri Lanka achieved a surplus by the end of 2023, since 1977
• Despite primary deficit of 3.7% of GDP in 2022, Sri Lanka achieved a primary budget surplus in 2023
• State enterprises managed to generate a profit of Rs. 313 billion by September 2023 
• Increase in tax registration, with the number of registrants soaring from 437,547 in 2022 to 1,000,029 by the end of 2023, representing a 130% increase

By Yohan Perera and Ajith Siriwardana  

The government was planning to reduce the tax burden as economic reforms continue to stabilize the economy, President Ranil Wickremesinghe said in his Policy Statement in Parliament yesterday.  

“We are also revising the VAT percentage to further support economic growth,” he added.

Delivering the government’s Policy Statement in Parliament, he said the tax registration has substantially increased, with the number of registrations growing from 437,547 in 2022 to 1,000,029 by the end of 2023, representing a 130% increase.  

 “Continuing our economic reforms, we aim to alleviate the tax burden as the economy stabilizes. There is also room for a potential revision of the VAT percentage. All these endeavours are undertaken amid a substantial debt burden. Throughout the past, concerted efforts have been made to formulate a strategic plan for repaying this debt. The domestic debt restructuring plan has been successfully executed as the first step, and a policy agreement for restructuring has been reached with foreign creditors as the second step, he said.  

Highlighting that Sri Lanka will join the Regional Comprehensive Economic Partnership (RCEP), and will be connected with the common system of trade variations in the European Union, President Wickremesinghe yesterday called for the support of all political parties to achieve this goal.   

“It is imperative to reassess our foreign relations in light of current needs and geopolitical trends. The restructuring of our foreign relations should prioritize leveraging economic potentials. Therefore, adopting new foreign policies that enhance the country’s economic strength and fostering non-aligned policies and friendships with all states are crucial. These directions of our foreign policy is evolving to align with the contemporary era. Efforts are underway to establish a new network of economic relationships that facilitate our products’ entry into foreign markets. The goal is to forge free trade agreements with numerous countries. A free trade agreement was signed with Thailand, steps are being taken to enhance the trade agreement with India, and the free trade agreement with Singapore is fully operational. There are also plans to pursue a free trade agreement with China, Indonesia and Bangladesh in the future,” the President said during the ceremonial opening of Parliament.