Treasury unit to handle new ‘Special Goods and Services Tax’

The Finance Ministry will set up a new unit under the a Treasury Deputy Secretary to be charged with the administration and collection of the newly introduced ‘Special Goods and Services Tax’.

The new Bill titled ‘Special Goods and Services Tax’ was published in the Gazette last Friday (7) on the order of Finance Minister Basil Rajapaksa as per the Budgetary proposals for this year.

The Bill will be presented in Parliament for the First Reading after it resumes sittings.

The new tax is imposed on selected goods including liquor, cigarettes and vehicles (inclusive of parts for assembling of vehicles) and selected services including telecommunications and betting and gaming. The ‘Special Goods and Services Tax’ applies to every manufacturer, importer or service provider of the above mentioned categories of goods or services.

The Special Goods and Services Tax is in lieu of the sums chargeable on the above mentioned goods and services by way of tax, duty, levy, cess or any other charge imposed by law. The new Bill has been introduced to avoid the complexities associated with the application and administration of a multiple tax regime on specified goods and services. It is aimed at greater efficiency in relation to the collection and administration on taxes.

Accordingly, the Excise duty, Telecommunication Levy, Cellular Tower Levy, Luxury Tax on Motor Vehicle, Levy on Mobile Short Messages Services, Vehicle Entitlement Levy, Betting and Gaming Levy on gross collection, Customs Duty, Cess, and Port and Airport Development Levy shall not be applicable in respect of the specified goods or services mentioned above after the enactment of the new Bill.

The Deputy Secretary to the Treasury in charge of the new unit will have to maintain a register of taxable persons, and the payments will credited to the Consolidated Fund. Previously, the Inland Revenue Department was in charge of collection of these taxes.

Any manufacturer, importer or service provider of the above mentioned goods and services, who is not registered with the new unit or willfully evades or attempts to evade payment of the Special Goods and Services Tax, commits an offense. Upon conviction after summary trial, such person will be liable to a fine not exceeding Rs 3 million or to imprisonment of either description for a term not less than one year or to both such imprisonment and fine.

A penalty equal to ten percent of the amount of total due is applicable on late payments.

The Finance Ministry at the same time has published in the Gazette an Amendment to the Value Added Tax Act to increase the VAT rate from 15 to 18 percent on supply of financial services on financial institutions with effect from January 1, 2022.

by Daily News Sri Lanka

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