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

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.
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