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

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instructions can be exempted if such services are in relation to the payment of any Note or Order for payment. (v) Credit Card Operations Fees paid in connection with the take over of the merchant debtor can be exempt on the basis that it is a transfer of ownership of a debt security. (vi) Other Services provided by Banks and Financial Institutions (Ruling issued under VAT All the services provided by banks whether they are ancillary services or not are not essentially financial services for the purpose of VAT, For the purpose of VAT many of the supplies by the banks are treated as “mixed supplies” and the strictly financial services component for VAT purposes can be separated. Thus. • Leasing, Management Services, Consultancy Services and Commission earned form Investment Management Services • Courier Services, Provision of safety lockers, sale of unwanted articles, sale of properties mortgaged. • Legal fees on granting of loans and other legal fees recovered form customers. • Photocopy charges, telex/fax charges • Commission earned from providing custodian services, insurance services. • Credit card joining fees • Non refundable tender deposits • Other income such as income from entrepreneur development activities. Are treated as “separate supplies” which are taxable and not treated as supply of financial services 24.10 International Permits Charges for issuing international permits are liable to VAT since the service is provided to a person in Sri Lanka. However, any amount included as a government charge may be considered as a re-imbursement of expenditure and may be excluded from the “Value of supply” 24.11 Film Exhibitors Film exhibitors are liable to be registered for VAT as agents of the Film Corporation and other irrespective of whether the value of supply is below or above the taxable threshold. They are required to file monthly VAT returns. However they may not charge VAT on other activities if the “value of supply” of other activities is below the threshold. If the 130
value of supply of other activities are above the threshold “output tax” from “exhibition of films” and “output tax” on other activities can be declared in the same return. 24.12 VAT Invoicing on advertising i. Advertising in media (in news papers, Radio, T.V. etc) is often done through agents. The media gets 85% of the charge and the agent gets 15%. If it is done through an agent, the agent should issue a tax-invoice for the “whole amount” and account for output tax if the agent is a Registered Person. ii. Then the media (Newspaper, Radio, TV) should issue a tax-invoice on their share of 85%, to the agent and charge output tax to the agent. By using this invoice the agent can claim that amount as input tax. iii. In addition both the media and the agent can claim input tax credit on other relevant items of expenditure. iv. The payment for Arts work, Models, or any other inputs in relation to the production of advertisement . (Radio/TV commercials) cannot be deducted from the gross amount when arriving at the “Value of supply” for VAT purposes. However, if these service providers are registered persons they will issue tax invoices and the media or the agent can claim input tax. v. If the “agent is not registered” for VAT then the media should charge VAT on the full value of the service provided. The agent cannot charge VAT on the commission of 15%. vi. If the above method is not adopted then the media should directly invoice the client on the full value + VAT and the agent can claim his 15% commission + VAT if applicable from the media. vii If the business is directly done by media without an agent the media should directly invoice the client, “value of supply + VAT”. 24.13 The following rulings have also been issued under VAT. Renting of Co-owned properties The renting or leasing of a property by its co-owners (or undivided share holders) of such property amounts to a taxable activity carried on by the co-owners (or the undivided share holders as the case may be) which is different from any other taxable activity that may be carried on by an individual co-owner or some of the co-owners. i. If the rent received by the co-ownership exceeds the threshold it should obtain registration for VAT as a “Registered Person” which is separate and distinct from 131
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But for the best to the September 0
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Preface The Value Added Tax Act was
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Chapter - 1 Introduction 1.1 Purpos
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However from the point of view of t
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The following test which has been a
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iv. Import of any fabric, yarn, gre
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Chapter - 3 The definitions of conc
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Eg. 1 : If “A” wants to termina
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c. Time of supply in relation to su
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Thus, any trade, business, etc. are
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a business in Sri Lanka and not to
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When the recipient is not a registe
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• There are two types of registra
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(ii) continued without making an ap
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(d) (e) (f) input credit has been c
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4.13 Activity Code Number “Suppli
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the H.S. classification it may be b
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5.8 Payment of tax on Assessments T
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5.11. Collection of VAT on Imports
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6.3 Approval For Deferment Facility
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iv. If an importer declares only pa
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6.6 Deferment on Local Supplies (Te
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7.4 Tax Invoice Tax invoice should
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7.11 Use of tax fraction to compute
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Lower Rate - 10% Goods and services
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Chapter - 9 Calculation of Tax 9.1
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accounted for in respect of all the
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transferred to a taxable activity a
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Eg. If A is an ice-cream vendor who
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(3) In the above case if the regist
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• claim (deduct) only the allowab
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• “Value of Supply” has to be
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VAT chargeable = 900,000 x 20% = 18
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• The Director General of Customs
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10.5.6 Milk - item (iv) • Liquid
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(i) Insurance - xi(i) • Only the
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in Sri Lanka and consumed in Sri La
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Chapter - 11 Refunds 11.1 Unlike in
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11.7 Set off of refunds against fut
Page 80 and 81: • To make an additional assessmen
Page 82 and 83: a genuine taxpayer who does not wis
Page 84 and 85: Penalties Tax payers should comply
Page 86 and 87: 15.3 Keeping of records regarding e
Page 88 and 89: 15.8 Example of a VAT Account VAT A
Page 90 and 91: the trading house or the other pers
Page 92 and 93: 16.4 Concessions available to Expor
Page 94 and 95: v. Importation of services are not
Page 96 and 97: Chapter - 17 Hire Purchase Transact
Page 98 and 99: (a) Under the existing provisions V
Page 100 and 101: y the hire-purchase company to the
Page 102 and 103: Chapter - 18 Leasing & VAT 18.1 Lea
Page 104 and 105: installments. Any VAT not recovered
Page 106 and 107: 18.13 Leasing inputs • Leasing in
Page 108 and 109: 18.15 Leasing Advance Sometimes it
Page 110 and 111: Thus output tax of B on the termina
Page 112 and 113: Chapter - 19 Mortgages 19.1 Mortgag
Page 114 and 115: • Services provided by internatio
Page 116 and 117: Chapter - 21 Some Obligations Under
Page 118 and 119: However an adjusted figure must be
Page 120 and 121: Chapter 23 Construction Contracts 2
Page 122 and 123: Government agencies mentioned above
Page 124 and 125: Chapter - 24 Rulings 24.1 Following
Page 126 and 127: • None of the companies covered b
Page 128 and 129: which he has supplied to the garage
Page 132 and 133: ii. iii. any other registration tha
Page 134 and 135: i. Membership fees and or subscript
Page 136 and 137: Chapter - 25 Zero Rated Supplies 25
Page 138 and 139: (ii) (iii) (iv) Services directly c
Page 140 and 141: Supply of facilities for crew chang
Page 142 and 143: 4. Yard to Port Transporting contai
Page 144 and 145: Chapter - 26 Travel Trade, Tourism
Page 146 and 147: ii. iii. But “travel insurance“
Page 148 and 149: 26.6 VAT ON MICE Tourism VAT rate a
Page 150 and 151: x. Supply of goods & vehicles free
Page 152 and 153: and for VAT purposes the two compon
Page 154 and 155: (i.e the lottery organizer) on whic
Page 156 and 157: The VAT charged on above should be
Page 158 and 159: 1.2.3 Other imported materials exce
Page 160 and 161: The sub-contract awarder should pay
Page 162 and 163: 2.3.1 Imported goods (except fabric
Page 164 and 165: 5.2.2 To BOI garment manufacturing
Page 166 and 167: Annexure - 2 First Schedule to the
Page 168 and 169: 4. Supply of any services to any Di
Page 170 and 171: Services 1. Electricity more than 3
Page 172 and 173: Sale before 01.08.2002 - GST Regime
Page 174 and 175: GST = (CIF + CD + Surcharge + Ex.Sp
Page 176 and 177: to indicate the date of payment of
Page 178 and 179: The period within which the Board o
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Mrs. S.N.P. Abrew - Senior Assessor
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