📈 Sri Lanka Tax Policy: Proposals to Exclude Traders from VAT & Abolish Double Taxation

• Core Issue: Experts highlight that imposing both Value Added Tax (VAT at 18%) and Social Security Contribution Levy (SSCL at 2.5%) on the same four business sectors creates inefficient double taxation, raises operational costs, and fuels inflation. • Trading Sector Concerns: Traders operate on thin margins (~10%) under Maximum Retail Prices (MRPs) and often buy from non-VAT registered suppliers, making output VAT impractical and yielding minimal net revenue (under 2% of turnover). • Key Recommendations: - Remove trading from the VAT net and limit SSCL exclusively to non-VAT registered traders and small suppliers. - Reset the annual VAT registration threshold to Rs. 12 million specifically for primary value-adders (manufacturers, importers, and service providers). - Exempt primary suppliers from SSCL to eliminate overlap, offsetting potential revenue gaps by adjusting the VAT rate to 20%.