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

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v. Importation of services are not recognized in the Customs Ordinance. However a supply of a service which constitute a taxable activity, carried on or carried out in Sri Lanka by a person outside Sri Lanka is liable to VAT under VAT Act. Vide Eg. 2 in para 3.7 (ii) vi. In the case of importation computer soft ware the question will arise as to whether they are goods or services. Normalized mass produced common software which can be used by any person and which may be received in diskettes, magnetic tapes, discs and games packages etc is treated as goods whereas specific customized software is treated as services. (vide para 3.3) vii. VAT on importation of goods is calculated on the “value of supply” which is = (CIF + Cus. Duty + Any surcharge + Cess + Ex. Spl. Duty) at 10% or 20% as the case may be. - Vide para 3.8(2) 16.8 Imports by non-registered persons : VAT is chargeable on the importation of goods by any person whether he is a registered person or not if the goods are liable to VAT. If the importer is not a registered person he is required to obtain an Importers Identification Number from the VAT Branch in order to clear the goods from the Customs. 16.9. Deferment of VAT on Imports : The D.G.C is required to defer the collection of VAT for a period of 60 days in respect of certain goods as enumerated in Section 2(3) – Vide Chapter 6 and 16.10, 16.11. 16.10 Exemption of Imports by BOI companies Please see para 10.4 16.11 Exemption of imports made in personal baggages, and import of personal goods and business samples through courier and parcel post - Please see para 10.3 16.12 Exemption of Imports - Other items – are enumerated in the First Scheduled to the Act. Please see Annexure 2 16.13 Exclusion of Imports by approved trading houses – Please see para 2.4.1 (iii) 16.14 Input tax on goods imported by a registered person which are not used in a taxable activity or partly used in a taxable activity - shall be allowed on a proportionate basis section 22 (3) 94
16.15 Custom Bonded Area – What is meant by a Customs Bonded Area is defined in Section 83 of the Act. Bonded areas means ware – houses approved under various provisions of the Customs Ordinance. Free Trade Zones declared by the Board of Investment of Sri Lanka which are subject to monitoring by the Department of Customs are also treated as bonded areas. No VAT is charged on the imported goods if they are transferred to a Customs Bonded Area. But VAT is charged when they are removed from the bonded area as the removal tantamount to an import according to the definition of import. There are seven Free Trade Zones approved as bonded areas at Katunayake, Biyagama, Koggala, Pallekele, Migirigama, Malwatta and Watupitiwala. If any goods are transferred out of these bonded areas even for processing purposes VAT is payable as an import. Vide para 16.7 (I) (a) (ii). 95
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But for the best to the September 0
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Preface The Value Added Tax Act was
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Chapter - 1 Introduction 1.1 Purpos
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However from the point of view of t
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The following test which has been a
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iv. Import of any fabric, yarn, gre
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Chapter - 3 The definitions of conc
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Eg. 1 : If “A” wants to termina
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c. Time of supply in relation to su
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Thus, any trade, business, etc. are
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a business in Sri Lanka and not to
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When the recipient is not a registe
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• There are two types of registra
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(ii) continued without making an ap
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(d) (e) (f) input credit has been c
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4.13 Activity Code Number “Suppli
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the H.S. classification it may be b
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5.8 Payment of tax on Assessments T
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5.11. Collection of VAT on Imports
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6.3 Approval For Deferment Facility
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iv. If an importer declares only pa
Page 44 and 45: 6.6 Deferment on Local Supplies (Te
Page 46 and 47: 7.4 Tax Invoice Tax invoice should
Page 48 and 49: 7.11 Use of tax fraction to compute
Page 50 and 51: Lower Rate - 10% Goods and services
Page 52 and 53: Chapter - 9 Calculation of Tax 9.1
Page 54 and 55: accounted for in respect of all the
Page 56 and 57: transferred to a taxable activity a
Page 58 and 59: Eg. If A is an ice-cream vendor who
Page 60 and 61: (3) In the above case if the regist
Page 62 and 63: • claim (deduct) only the allowab
Page 64 and 65: • “Value of Supply” has to be
Page 66 and 67: VAT chargeable = 900,000 x 20% = 18
Page 68 and 69: • The Director General of Customs
Page 70 and 71: 10.5.6 Milk - item (iv) • Liquid
Page 72 and 73: (i) Insurance - xi(i) • Only the
Page 74 and 75: in Sri Lanka and consumed in Sri La
Page 76 and 77: Chapter - 11 Refunds 11.1 Unlike in
Page 78 and 79: 11.7 Set off of refunds against fut
Page 80 and 81: • To make an additional assessmen
Page 82 and 83: a genuine taxpayer who does not wis
Page 84 and 85: Penalties Tax payers should comply
Page 86 and 87: 15.3 Keeping of records regarding e
Page 88 and 89: 15.8 Example of a VAT Account VAT A
Page 90 and 91: the trading house or the other pers
Page 92 and 93: 16.4 Concessions available to Expor
Page 96 and 97: Chapter - 17 Hire Purchase Transact
Page 98 and 99: (a) Under the existing provisions V
Page 100 and 101: y the hire-purchase company to the
Page 102 and 103: Chapter - 18 Leasing & VAT 18.1 Lea
Page 104 and 105: installments. Any VAT not recovered
Page 106 and 107: 18.13 Leasing inputs • Leasing in
Page 108 and 109: 18.15 Leasing Advance Sometimes it
Page 110 and 111: Thus output tax of B on the termina
Page 112 and 113: Chapter - 19 Mortgages 19.1 Mortgag
Page 114 and 115: • Services provided by internatio
Page 116 and 117: Chapter - 21 Some Obligations Under
Page 118 and 119: However an adjusted figure must be
Page 120 and 121: Chapter 23 Construction Contracts 2
Page 122 and 123: Government agencies mentioned above
Page 124 and 125: Chapter - 24 Rulings 24.1 Following
Page 126 and 127: • None of the companies covered b
Page 128 and 129: which he has supplied to the garage
Page 130 and 131: instructions can be exempted if suc
Page 132 and 133: ii. iii. any other registration tha
Page 134 and 135: i. Membership fees and or subscript
Page 136 and 137: Chapter - 25 Zero Rated Supplies 25
Page 138 and 139: (ii) (iii) (iv) Services directly c
Page 140 and 141: Supply of facilities for crew chang
Page 142 and 143: 4. Yard to Port Transporting contai
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Chapter - 26 Travel Trade, Tourism
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ii. iii. But “travel insurance“
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26.6 VAT ON MICE Tourism VAT rate a
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x. Supply of goods & vehicles free
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and for VAT purposes the two compon
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(i.e the lottery organizer) on whic
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The VAT charged on above should be
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1.2.3 Other imported materials exce
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The sub-contract awarder should pay
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2.3.1 Imported goods (except fabric
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5.2.2 To BOI garment manufacturing
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Annexure - 2 First Schedule to the
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4. Supply of any services to any Di
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Services 1. Electricity more than 3
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Sale before 01.08.2002 - GST Regime
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GST = (CIF + CD + Surcharge + Ex.Sp
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to indicate the date of payment of
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The period within which the Board o
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Mrs. S.N.P. Abrew - Senior Assessor
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