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

10.1 Exemption from payment of VAT
Chapter – 10
Exemptions
• Section 8 of the Act exempts certain “supplies” of goods and services (including
certain imports) from VAT. The exempt “supplies” are enumerated in the First
Schedule to the Act.
• What is exempted is the “supply” (including imports) and not the persons (ie.
individuals and organizations) Thus irrespective of the person importing
goods or the person receiving the “supply”, if the “supply” is exempted then the
“receiver” of the supply, (or the importer) is not required to pay VAT on such
supply/import. The only instance where individuals and organizations are
exempted from VAT is the exemption of Diplomatic Missions and privileged
individuals and organizations qualified under the Diplomatic Privillages Act NO. 9
of 1996. There too the exemption is limited to certain supplies and certain
imports as identified by the C.G.I.R (vide Chapter 20).
• Thus all individuals and organizations whether they are Ministries, Departments
Non profit making organizations, Religious Institution etc., other than those
privileged individuals and organizations, are required to pay VAT when they
import goods and when they receive “supplies” of goods and services from
Registered Persons, if the “import” or the “supply” is not exempted.
10.2 Exemption from charging VAT
The Act does not provide any exemption in this regard. If the value of the taxable
supplies made by any person exceeds the registrable threshold then such person
(whether an individual or an organization) should register for VAT and charge VAT on the
taxable supplies made by such person. The status of the individual or the nature of the
organization is irrelevant.
10.3 Imports (Exemption)
• Out of the goods enumerated in the H.S. Code classification the Customs has
identified the VAT exempt goods in consultation with Inland Revenue. They are
clearly indicated in that VAT Guide & PRO – 03/2002 dated 01.08.2002.
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