<p>The Press Release dated 31.05.2022 was issued by the Media Division of Prime Minister’s Office setting out several proposals revising the VAT regime. A summary of salient features of such proposals is set out below:<br><br></p><table><thead><tr><th scope="col">Current</th><th scope="col">Proposed</th><th scope="col">Effective Date</th></tr></thead><tbody><tr><td colspan="3"><strong>1. Changes in Tax Rate</strong></td></tr><tr><td data-label="Current">8%</td><td data-label="Proposed">12%</td><td style="margin: 0px; padding: 0.625em; border: 1px solid black; font: inherit; vertical-align: baseline; text-size-adjust: none; box-sizing: border-box; border-collapse: collapse; text-align: left;" data-label="&gt;Effective Date">With immediate effect (i.e., 01.06.2022)</td></tr><tr><td colspan="3"><strong>2. Reduction of Threshold</strong></td></tr><tr><td data-label="Current">LKR 300 Mn, p.a. or LKR 75 Mn, per quarter</td><td data-label="Proposed">LKR 120 Mn, p.a.</td><td style="margin: 0px; padding: 0.625em; border: 1px solid black; font: inherit; vertical-align: baseline; text-size-adjust: none; box-sizing: border-box; border-collapse: collapse; text-align: left;" data-label="&gt;Effective Date">01.10.2022</td></tr><tr><td colspan="3"><strong>3. Removal of Exemptions</strong></td></tr><tr><td data-label="Current">Exempt</td><td data-label="Proposed">Following exemptions to be removed:<br><br>• Condominium Residential Apartments;<br>• Certain unproductive exemptions based on economic benefits (specific details to be specified).</td><td style="margin: 0px; padding: 0.625em; border: 1px solid black; font: inherit; vertical-align: baseline; text-size-adjust: none; box-sizing: border-box; border-collapse: collapse; text-align: left;" data-label="&gt;Effective Date">01.10.2022</td></tr><tr><td data-label="Current">0%</td><td data-label="Proposed">Removal of 0% rate on supply of services by a hotel, guest house, restaurant or other similar businesses providing similar services, registered with the Sri Lanka Tourism Development Authority, if 60% of the total value of the inputs are sourced from local supplies/sources.<br><br>Upon introduction, these will be subject to VAT at 12%.</td><td style="margin: 0px; padding: 0.625em; border: 1px solid black; font: inherit; vertical-align: baseline; text-size-adjust: none; box-sizing: border-box; border-collapse: collapse; text-align: left;" data-label="&gt;Effective Date">&nbsp;</td></tr></tbody></table><p><br><br></p>