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

that the supplier may buy and sell/ or supply goods under a tender agreement does not
mean that he is engaged in a retail or wholesale business. The jurisdiction of provincial
councils is limited to “turnover tax on retail and wholesale sales” only. (Item 36.1 of list 1
of Schedule 9 to the 13 th Amendment to the Constitution). Buying and selling does not
always tantamount to retail and wholesale sales. Buying and selling may be possible
even in respect of intangible assets but it is not possible to do any retail or wholesale
business with such assets.
4.7 Importers Identification Number (IIN) – Section 11
• The importers who are not registered under VAT permanently should notify the
CGIR not later than 14 days prior to the clearing of goods from the Customs. An
identification number is issued for the purpose of clearing of the goods only. It
shall not be treated as a Registration for VAT purposes although sometimes
people referred to it as temporary registration.
• A person who imports under Passenger Baggages (Exemption) Regulations is
not required to obtain I.I.N.
• Note: Such identification number is valid only for twelve months for the clearance
of goods by persons who are not liable to VAT. Customs department will monitor
the import of goods by such persons on the basis of instructions issued by CGIR
from time to time. At present, if the cumulative value of imports exceeds Rs. 2
million under a particular IIN Customs will not clear goods until you obtain a
Permanent Registration or a clearance from Inland Revenue. The limit of Rs.2
Million is not applicable to Government Departments, Ministries, Government
Universities and for persons who import exempt goods.
N.B. The I.I.N. Certificate must be returned to the department in order to obtain a
permanent registration number.
4.8 Cancellation and Changes
(a) Application for a cancellation of a registration can be made at any time after the
laps of 12 months (Section 16) Thus once registered you are required to charge
VAT at least for 12 months even if your sales fall below the registrable limit (vide
para 5.1.1)
(b) Notwithstanding the de-registration every person is liable for any act done or
omitted to be done while he was a registered person (Section 18)
(c) Any goods/assets at the time of cancellation of registration shall be deemed to
be supplied in the course of carrying on the taxable activity. Thus, before deregistration
a person will be asked to pay VAT on existing stocks and assets
unless the taxable activity is transferred as a whole (including all assets on which
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