📊 Govt. Maintains Rs. 60m VAT Threshold to Protect SMEs

• Overall Decision: The Government confirmed no decision has been taken to re-implement the proposed lowering of the annual Value Added Tax (VAT) registration threshold from Rs. 60 million to Rs. 36 million. • Background & Impact: The proposed reduction, introduced in the 2026 Budget, aimed to expand the tax base by adding roughly 10,000 additional businesses to the VAT net. However, it was withdrawn in June to avoid placing further financial strain on SMEs recovering from Cyclone Ditwah and Middle East conflict impacts. • Tax Base Breakdown (as of 30 June 2026): • Total VAT-Registered Taxpayers: 36,656 (excluding 371 registered for financial services). • Registered Corporate Taxpayers: 139,000. • Key Debate: Opposition MP Ravi Karunanayake raised concerns at the Committee on Public Finance (CoPF), arguing that shelving the lower threshold delays essential tax base broadening and keeps the revenue burden concentrated on existing taxpayers.