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

Chapter - 4
Registration and Cancellation
4.1 As stated earlier there are two types of registrations namely, compulsory registration and
voluntary registration. In addition the C.G.I.R can compel a person to register while the
importers are required to register for the purpose of clearing goods if they are not
already registered for VAT. A taxable activity must exist before a person is registered for
VAT.
4.2 Compulsory Registration – Section 10
(a)
(b)
(c)
(d)
Every person who carries on a taxable activity should register for VAT if the
Value of his taxable supplies exceeds or likely to exceed.
- Rs.500,000 per any quarter or
- Rs.1,800,000 per annum
Such person must notify the C.G.I.R within 15 days of his liability to be
registered.
In computing the value of supplies to determine the above threshold, the
following should be excluded.
- any exempted supplies
- any excluded supply of a buying and selling activity (other than
buying & selling in connection with any activity of import or
manufacture)
- VAT chargeable on the supply.
Once a person is registered for VAT he should charge VAT on all the taxable supplies
made by him even if his turnover falls below the above limits until he is officially deregistered.
(Please see example in para 5.1.1.)
4.3 Voluntary Registration – Section 12
• Irrespective of the value of the taxable supplies, any person who wishes
to register for VAT can apply for voluntary registration. However, such
registration may be refused by the CGIR based on the facts of the case.
• Voluntary Registration has been extended to wholesale and retail trade
activity as well. (Sec. 3 proviso)
Accordingly –
(i.) Persons already registered for VAT should obtain specific approval to
charge VAT in respect of retail and wholesale sales. Such specific
approval should be displayed at the place of the business (if already
paying GST on retail and wholesale sales the registration can be
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