Proposal to Reduce VAT Registration Threshold Will Not Be Implemented: Deputy Minister Nishantha Jayawardena

25-Jun-2026

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Deputy Minister of Economic Development Nishantha Jayawardena announced that the Budget proposal to reduce the annual turnover threshold for Value Added Tax (VAT) and Social Security Contribution Levy registration from Rs. 60 million to Rs. 36 million will not be implemented.

Speaking during the parliamentary debate on June 23, he stated that the proposal had been scheduled to take effect from July 1, 2026.

However, following consultations with the Cabinet, the Attorney General, and the Parliamentary Consultative Committee, a decision was taken to withdraw the proposal.

The Deputy Minister noted that while opposition parties had initially called for such taxation measures, they are now opposing the initiative.

He emphasised that economic recovery measures cannot be pursued solely for political gain.

According to him, the Government concluded that reducing the threshold to Rs. 36 million is not appropriate at this stage. Additional time is required for the Inland Revenue Department to prepare administrative systems and strengthen tax collection mechanisms.

The matter was discussed extensively at the Committee on Public Finance, and concerns had also been raised by various stakeholders.

The Government therefore decided that the present moment is not suitable for implementing the proposed reduction.