The government has announced a VAT rate increase from 15% to 18% effective from January 1, 2024, to meet revenue targets set by the International Monetary Fund (IMF). Despite a significant 51% increase in tax receipts during the first nine months, the government fell short of the IMF's revenue expectations, delaying the second tranche of a $2.9 billion Extended Fund Facility. This decision aims to address the revenue and primary balance targets agreed upon with the IMF and will include new taxes on specific goods and services not covered by VAT. While acknowledging public hardships, the government sees this as a necessary step, given the need to cover public sector salaries, welfare payments, and recurrent expenses, with further taxes likely in the upcoming budget presentation. The decision has faced criticism from the public.

https://www.ft.lk/front-page/Govt-hikes-VAT-to-18-to-meet-revenue-targets-set-by-IMF/44-754699