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

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Chapter - 26 Travel Trade, Tourism and Hotel Industry. 26.1 Travel Products i. All travel products provided in Sri Lanka are liable to VAT if the provider is a registered person. (Eg. Air fares for local and international travel, bus fares and car hires for tourists excursion tours etc., services provided by Hotels Guest houses, Rest Houses and Restaurants and included in a travel package are also liable to VAT). ii. Tour Operators and Agents • Tour operators performs the role of the wholesalers in the industry in that they package various travel accommodation components into a marketable tour. That tour will either be sold directly by the tour operator or through an agent either in Sri Lanka or overseas. • Sales marketed in Sri Lanka constitute domestic travel which is liable to VAT as explained below (para 26.2) • Sales marketed outside Sri Lanka by out-bound tour operators are also liable to VAT (para 26.3). iii. General Sales Agents (G.S.AA) General sales agents normally represent overseas principles as their Master agents in Sri Lanka and sells overseas facilities on behalf of the principle. For the performance of that service they receive a marketing fee and an over-rider commission. The overseas service component of the tour is not liable to VAT but the commission received by the GSA is liable to Sri Lanka VAT. 26.2 Domestic Travel i. This means excursion tours and tours arranged for tourists etc., with or without hotel facilities but not public passenger transport services. ii. If an agent arranges the tour the agent receives a commission from the tour operator (ie the supplier). Supplier should charge VAT on his price and the agent should charge VAT to the supplier on the commission if both are registered persons. The payment can be in one of the following ways. (a) Customer pays the agent (b) Customer pays the supplier direct after confirmation of booking through agent. iii. (a) If the sale price is Rs.1000/- and the customer pays agent 144
Value of Supply Commission Net Proceeds Paid to Agent Retained by Agent paid to the (say 10%) supplier by the agent Sale price 1000 100 900 VAT @ 20% 200 20 180 1200 120 1080 • Customer pays 1200/- to the agent and he keeps 120/- of which 20/- he should pay as output tax. • The supplier should pay 200/- as output tax and deduct 20/- as input tax paid to agent. • If the agent is not registered then the agent will not retain 20/- and the suppliers output tax will be 200/- without any deduction of input tax in relation to agents commission. Net proceeds to the supplier will then be 900+200 = 1100 (b) Customer pays the supplier: - Value of Supply Commission Amount Retained paid to Supplier paid to Agent by Supplier by the customer (say 10%) Sale price 1000 100 900 VAT @ 20% 200 20 180 1200 120 1080 • Here again the final position is the same but the money is first received by the supplier who in turn pays commission to the agent for which the agent charges 20% VAT. • The output tax to be declared by the agent is 20/-. In the case of the supplier output tax is 200/- and input tax is 20/-. • Both the supplier and the agent can claim other input taxes in relation to other expenses incurred during the course of this taxable activity. 26.3 Out Bound Travel i. Transportation of passengers outside Sri Lanka is zero-rated because it is a service consumed outside Sri Lanka. Thus no VAT is payable by the consumer on any out-bound travel products such as Air-fares and ship-fares. But the commission received by a local travel agent is liable to VAT. 145
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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
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• To make an additional assessmen
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a genuine taxpayer who does not wis
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Penalties Tax payers should comply
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15.3 Keeping of records regarding e
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15.8 Example of a VAT Account VAT A
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the trading house or the other pers
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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 130 and 131: instructions can be exempted if suc
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 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
Page 180 and 181: Mrs. S.N.P. Abrew - Senior Assessor
Page 182: 182
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