Sri Lanka hikes VAT to 15%

Sri Lanka announced this week that it intends to raise VAT from the current 11% to 15%.

The rise will be subject to Parliament's approval and not implementation date has been set.  The zero rating for telecoms, health and private education services will be withdrawn.

There was a plan at the start of this year to split the current 11% rate into differing rates for goods and services. This was withdrawn.

The rise is seen as an important condition to closing a $1.5billion load from the International Monetary Fund. Sri Lanka will also introduce a capital gains tax regime.