VAT exemptions for locally sourced milk, yogurt and naphtha
Daily FT: The Inland Revenue Department (IRD) yesterday confirmed that locally produced liquid milk and yoghurt are now exempted from Value Added Tax (VAT).
The VAT exemption came into effect from 11 April, following the official certification of the Value Added Tax (Amendment) Act No. 04 of 2022.
The exemption applies only to products made with at least 50% locally sourced fresh milk.
In addition, VAT has also been removed from naphtha supplied by the Ceylon Petroleum Corporation (CPC) to the Ceylon Electricity Board (CEB) for power generation.
OSL take:
Sri Lanka is committed to expanding the country’s production process in-line with the path to becoming a hub in the South Asian region. The country is also focused on further strengthening and expanding the production process and the latest move to exempt locally sourced milk and yogurt from VAT is yet another step towards Sri Laka achieving self-sufficiency in dairy milk and dairy-based products. The growth in the local dairy industry is evident by the profits and expansions recorded by local dairy businesses. The target of achieving self-sufficiency in dairy milk has opened up many business/investment opportunities in Sri Lanka’s dairy industry. Foreign businesses/investors while exploring the expanding opportunities in Sri Lanka’s dairy industry, could also look at expanding operations through partnerships and joint ventures with local businesses. Also, the Sri Lankan government’s decision to exempt VAT from the naphtha provided to CEB for power generation indicates the authorities’ commitment to ensure an uninterrupted power supply at lower rates. All these developments make Sri Lanka an emerging business destination in the South Asian region.
| Article Code : | VBS/AT/20250423/Z_6 |