Sri Lankan government decides to introduce proposed 15% VAT on apartments from April 2019

Sri Lankan government decides to introduce proposed 15% VAT on apartments from April 2019

The Finance Ministry of Sri Lanka has reportedly stated that the proposed 15% value added tax (VAT) on apartment units would only be imposed from the 1st of April 2019.
The Ministry has also ruled out any policy inconsistency on behalf of the Government.
According to reports, the confusion of dates was due to a technical error in the initial document that deferred imposing the proposed 15% VAT for a year.
However, developers, and other stakeholders had subsequently been notified of the error by letter.
Be that as it may, there is a demand recorded for housing from people migrating from rural to urban areas, particularly to Greater Colombo townships.
Also, local media reports have noted that the propensity of demand for vertical properties offered by apartment complexes is particularly favoured due to the availability of multiple facilities and the perception of household security.

OSL take:

The imposing of the VAT on apartment units from next year would provide more time for persons interested in purchasing apartments to finalize their transactions before the tax comes in to place in April 2019. Persons who make their purchases before April 2019 would receive the price benefit since any purchases afterwards would include a 15% VAT component. Foreign businesses/investors engaged in business ventures in Sri Lanka could also use these few months to explore opportunities to purchase apartments for their use.

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Article Code : VBS/AT/12092018/Z_7

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