Sri Lankan government announce lower value added tax for tourism related industries
The Government of Sri Lanka has reportedly issued fresh legislation amending the value added tax (VAT) for tourism-related industries to 7% from the original 15%.
However, initially the government stated it would reduce VAT to 5% for the tourism sector, but has finally settled it at 7% reportedly to avoid restrictions on input credit claims after worried industry stakeholders lobbied the country’s Finance Ministry over the changes.
Sri Lanka’s Finance Ministry has issued a fresh gazette effective from 1 June to revise the VAT percentage charged on services rendered by a hotel, guest house, restaurant or other similar business providing similar services registered with the Sri Lanka Tourism Development Authority (SLTDA) to 7%, while charging the same percentage on inbound tour operators, travel agents registered with SLTDA.
According to the Ministry, the legislation is effective for the period from 1 June ending on 31 March 2020.
“The industry is very happy with the support given by the Government; we have received everything we have requested,” The Hotels Association of Sri Lanka (THASL) President Sanath Ukawatte has told Daily FT.
The Government of Sri Lanka has already approved the Cabinet proposal to carry out a Public Relations (PR) campaign to boost the country’s image as a safe country and rebuild confidence to promote it as a secure destination.
According to reports, approval was given for a PR campaign costing Rs. 416 million, which will run for 45 days or until the deliverables are achieved and a further Rs. 500 million was approved for a six-month-long PR campaign.
OSL take:
The reduction in value added tax for Sri Lanka’s tourism sector would help the industry that is currently engaged in a revival programme following the blow dealt by the Easter Sunday attacks. The tax reduction has also helped attract a local clientele to patronize the country’s leisure and hospitality sectors. Therefore, foreign businesses could explore business opportunities in Sri Lanka’s tourism sector.
| Article Code : | VBS/AT/11062019/Z_2 |