According to the state financial management report released by the Ministry of Finance, Sri Lanka has experienced a substantial increase in state revenue from the VAT, marking a 62.6% surge to 505 billion rupees in the first nine months of 2023. This surge represents 55.6% of the projected VAT revenue for the entire year.
During the same period, VAT revenue from local economic activities saw an impressive 81.4% increase, reaching 351.6 billion rupees. Additionally, VAT revenue from imports rose by 31.5%, amounting to 153.4 billion rupees.
The increase in VAT revenue can be attributed to a series of tax rate hikes. The VAT rate was initially raised from 8% to 12% on June 1, 2022, and later increased to 15% on September 1, 2022. Subsequently, the rate was further raised to 18% starting January 1, 2023.
