The Cabinet of Ministers, at its meeting on Monday (Dec.11), has granted approval to reduce the Value-Added Tax (VAT) registration threshold.

As such, the VAT registration threshold is expected to be slashed from Rs.80 million per annum to Rs.60 million per annum with effect from January 01, 2024.

The Third Reading of the VAT (Amendment) Bill was passed with amendments in parliament on Monday, by a majority of 45 votes, with 100 MPs voting for the Bill, and 55 voting against it.

Accordingly, the House had approved a hike in VAT up to 18% from the current 15%, ahead of the International Monetary Fund’s preparations to approve the second tranche of a $2.9 billion bailout for the crisis-hit country.

The Executive Board of the IMF is set to take up for consideration the first review of the 48-month Extended Fund Facility (EFF) Arrangement for Sri Lanka today.

Meanwhile, the Ceylon Chamber of Commerce has raised concerns about the proposed increase of the VAT to 18%, emphasizing that the move could lead to a further decline in consumption.