Books and printed material to be exempted from VAT under 2027 Budget

Daily Mirror reports that President Anura Kumara Dissanayake announced a proposed VAT exemption in the 2027 Budget. Daily Mirror, EconomyNext, Lanka Business Online and Newswire say it covers exercise books and printed books. Lanka Business Online and Newswire also include dictionaries, encyclopedias, children’s picture and colouring books, printed music and printed material on single sheets, with the exemption applying to imports and supply.

Newswire reports that VAT began applying to printed books and related material in January 2024, while exercise books had already been taxed. Newswire says the President described the proposal as intended to make educational resources more affordable and widen access to education, knowledge and reading.

Lanka Business Online and Newswire report proposed changes to the VAT Act, No. 14 of 2002, for cinema-related income. They say producers, distributors, cinema operators and the National Film Corporation would each be taxed according to their portion of ticket revenue, rather than the whole ticket amount. Lanka Business Online specifies that the relevant amount would be calculated after Entertainment Tax and before VAT.

Lanka Business Online and Newswire report a proposal to end the current VAT exemptions for artemia eggs and coconut coir pith. Both also describe changes involving exporters and foreign-currency transactions. Lanka Business Online says newly VAT-registered firms could meet the eligible-exporter definition if exports account for over 80% of turnover during the previous six months. Both outlets say the Central Bank’s indicative exchange rate would be used to convert foreign-currency transactions for VAT calculations.

Lanka Business Online reports that electronic tax invoices would have the same legal standing as paper invoices, with the Commissioner General of Inland Revenue to set technical standards and formats. Newswire reports an estimated Rs. 2.975 billion reduction in government revenue and an April 2027 start for the proposed changes. Lanka Business Online says implementation depends on passage of formal amendments to the VAT Act.