Laborers carry a load of imported cooking oil to a store in Colombo, Sri Lanka, Tuesday, Dec. 12, 2023. Sri Lankan lawmakers approved an increase in value added tax from 3 per cent ahead of the approval of a second tranche of International Monetary Fund's bail out. (AP Photo/Eranga Jayawardena)
COLOMBO: Sri Lanka slaps a new 18% value added tax (VAT) on fuel, mobile phones and computers to raise desperately needed revenue ahead of a foreign debt restructuring.
An earlier VAT of 15% on other consumer goods was also increased to 18% as the government sought to shore up its finances while Sri Lanka emerges from its worst economic crisis.
“In order to achieve economic stability, we must continue to forge ahead in this demanding path, one that is not adorned with flowers but presents formidable challenges,” President Ranil Wickremesinghe said in his New Year message.
Months of civil unrest sparked by the economic crisis forced the resignation of then-president Gotabaya Rajapaksa when protesters stormed his residence in July 2022. — AFP
His successor Wickremesinghe has raised taxes and cut government subsidies to comply with an International Monetary Fund bailout and cracked down on anti-government protests.
The IMF rescue programme requires him to finalise by May a restructure of the island country’s US$46bil external debt after a government default in 2022.
The higher taxes kicked in as the government negotiated with its bilateral lenders and sovereign bond holders to reschedule repayments, a key condition of the IMF bailout.
