On 4 January 2024, Sri Lanka’s Inland Revenue Department (IRD) published Circular No. SEC/2024/E/01 announcing the VAT registration requirements for suppliers of rubber, tea, and coconut products.
As per the amendments made to the Value Added Tax Act. No. 14 of 2002 (VAT Act) by the Value Added Tax (Amendment) Act, No. 32 of 2023, exemption of VAT for certain goods and services are removed and made liable for VAT with effect from 1 January 2024.
Accordingly, among the goods made liable for VAT are tea (excluding green leaf), rubber (excluding latex), and coconut products are included. Hence, persons engages in the manufacture and supply of tea, rubber, and coconut products (other than exempted goods and services) are required to register for VAT on or after 1 January 2024 when the value of taxable supply is reached or likely to reach the registration threshold as stipulated in section 10 of the VAT Act. The current threshold remains at LKR 20 million per quarter.
The Circular also offers details regarding the registration under the Simplified Value Added Tax Scheme (SVAT Scheme).
