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

- If the finance company does not become the owner of goods i.e when the
purchase is financed by a loan agreement goods are supplied directly by the
trader to the customer. Finance company enters into a separate transaction
with the customer to make a supply of a credit facility.
* supply from trader to customer is a supply of goods where the value of
supply is the value of goods and not the amount received from the
finance company.
* supply from finance company to customer is a supply of credit
x. Donations to schools – If the donation is in fact for a supply of a service(eg.
admission of a child or for some other consideration) VAT should be charged on
that supply. The school should declare output tax if it is Registered for VAT. If
no VAT is charged 1/11 of the donation will be treated as output tax.
xi. Indenting agents, who introduce importers from Sri Lanka, for their principle
resident abroad, is rendering a service in Sri Lanka and VAT is payable on the
commission even though it is received in foreign currency.(Vide Para 25.6)
xii. Management consultancy services etc. provided by persons outside Sri Lanka,
for persons in Sri Lanka by using documents, records other information or
technical devices in Sri Lanka via internet, e-mail or by other means with the
assistance or permission form a person in Sri Lanka may have to be treated as
services performed in Sri Lanka and the fees charged by the service provider
may be liable to VAT if the service provider can be deemed to be a person
registered for VAT. The recipient company in Sri Lanka can be treated as an
agent of the foreign supplier.
xiii. Printing - In the case of printing if the printer is only providing the service of
printing while the Customer provides the paper then it amounts to supply of a
service which is liable to VAT at 20%. However if the printer undertakes the
entire work, whether it is on his own or for a customer, the supply by the printer
tantamounts to a supply by a manufacturer. The items so manufactured should
be subject to VAT at the rates applicable to such items as a supply of goods by
a manufacture. Eg. Excise Books, Cheque Books, Ledger Books, Diaries,
Newspapers and Writing Pads etc. 20%. Magazines and Journals 10%. Text
Books and other items of similar nature such as Annual Reports, Audit Reports,
Administration Reports, Gazettes and Maps etc. are exempted.
xiv. Supply of Mixed Services & Composite Services - Sometimes provision of a
service may consist of supplies of several distinct services. For example a
lawyer or some other consultant may charge separately for his written
submission and typing work. This is sometimes referred to as a “mixed supply”
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