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