15% VAT on Apartment sales to come in to affect from 1st April 2019

Updated: 22/03/2019

15% VAT on Apartment sales will come in to affect from 1st of April 2019, according to the government Gazette issued 16th of August 2018, with the title ‘VALUE ADDED TAX (AMENDMENT) ACT, No. 25 OF 2018’.

According to the Finance Ministry sources, as it stands, if the Sales & Purchase Agreement (SPA) is signed before the 1st of April 2019, the buyer is not liable to pay VAT, even for payments made after this date. They however also said that this is still under discussion and might change in future.

The VAT exemption only applies if all units in the apartment project is under LKR 15 million; which would eliminate most of the apartments for sale in and around Colombo from this exemption.

VAT is also exempted if you’re buying the property from a private seller (owner) in the secondary market (re-sale), unless the property is owned by a VAT registered company.

If implemented, the increase in VAT is expected to significantly affect the sales of condominium units unless the developers absorb it’s costs in the selling prices.

VAT on apartments in Sri Lanka

The full Gazette can be read from here (Section 8 (ii))

The VAT implementation can only be cancelled or delayed by the government issuing a new Gazette notification, cancelling the previous amendments. This is unlikely to happen before the 1st of April.

A list of new apartment projects in the country can be found from here

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Comments
  • kumudu

    This tax system is not suitable for middle class people. if they have only a residential property,if any incident, if they had to sale the living property at the market value have to pay huge amount for various taxes. finally owner of the house nothing in hand. then they have to face for more difficulties to solve their problems.after that they fell in to more and more difficulties.who is going to solve their difficulties. will the govt. take responsiblilities to solve their difficulties. therefore this tax system will be okay for business people who doing business frequently as a huge investment not for every one. this tax system must be change immediately.