VAT Guide to Value Added Tax - sri lanka inland revenue ...

iv. Import of any fabric, yarn, grey cloth, finished cloths, chemicals and dyes used
for the manufacture of fabric by a BOI company, entered into an agreement
under Section 17 of the BOI Law for the purpose of manufacture of fabric.
v. Import of any ship (Vide Appendix 3 – Item 4)
2.4.2 Exclusion of local supplies – Sec. 3
VAT shall not be charged on the wholesale and retail supply of goods other
than wholesale and retail supply by
• a manufacturer of such goods
• an importer of such goods
• a supplier who is unable to satisfy the C.G.I.R. as to the source from which such
goods were acquired.
- However a person engaged in retail and wholesale sales can register voluntarily
to charge VAT on such sales.
- The evidence required with regard to acquisition of goods to satisfy the C.G.I.R
has been published in a press notice on 07.07.2000. Please see para 15.3.
(Excluded supplies are not within the purview of the VAT Act)
2.5 Charging, Collection and payment of VAT
• As stated in para 2.2 above it is a Registered Person who can charge VAT on
the supply of goods and services within Sri Lanka. He should charge and
collect VAT from the recipients of “taxable supplies” of goods and services
made by him. This should be done only in the course of a “taxable activity”
carried on by him. VAT should be charged by him at the “time of supply”. The
VAT chargeable is calculated on the “value of supply”.
• Thus VAT is in fact paid by the “recipient” of goods and services (i.e
consumer). It is paid to the “supplier” who should be a registered person. He
collects VAT from the recipient (i.e his customer) and remit the same to the
C.G.I.R as provided in Section 22(i). Therefore VAT is paid in the first instance
by the consumer to the registered person and then, by the Registered
Person to the C.G.I.R.
• A registered person is therefore responsible for charging and collecting VAT
on behalf of the C.G.I.R and account for such collections to the C.G.I.R in
respect of supplies of goods and services made by him in Sri Lanka.
• On imports VAT is paid by the importer and it is ’collected’ by the Director
General of Customs who in turn remit it to C.G.I.R. – Section 2(3). However the
DGC has delegated some of his powers to B.O.I. Vide para 5.11
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