The Hon. Champika Hettiarachchi

¶ 01 Hon. Deputy Speaker, we debate the VAT (Amendment) Bill. As the National People’s Power Government, we considered several matters: fixing deficiencies in the 01.01.2024 Gazette; aligning policy with our Government’s Policy Statement and the Budget; and correcting technical errors.

¶ 02 The 2024 Gazette had imposed VAT even on employee welfare benefits. We saw workers in BOI zones and large private firms struggling with transport—often having to take three-wheelers or break journeys on unsafe routes. Employers provided free or subsidized transport and meals to keep operations efficient and support workers—many of whom, particularly women, face health and nutrition issues (e.g., low hemoglobin). The VAT that had been charged on such free or subsidized meals and transport is being removed—this is what a people-oriented Government should do.

¶ 03 We also address aircraft spare parts HS codes where VAT was not previously collected—now regularized to ensure due revenue for public welfare.

¶ 04 Face value on stamps is being VAT-exempted, resolving long-standing anomalies.

¶ 05 On insurance, when local insurers use foreign reinsurers, commissions or recoveries tied to claims had fallen into VAT, ultimately burdening policyholders via “loading.” By exempting such reinsurance-related commissions/settlements from VAT, we lower costs and expand access to private health and other coverage for citizens.

¶ 06 For electricity generation, there were VAT differences between domestic and imported naphtha supplies; we now harmonize to a level playing field.

¶ 07 There was confusion about VAT on processed versus unprocessed agricultural products. The Opposition loudly complains, but it was they who had VAT on eggs under the 01.01.2024 Gazette; some try to pin it on this Government. We are correcting such issues.

¶ 08 Our aim is for taxpayers to be satisfied that VAT is fair and benefits return to the people; for revenue to flow properly; and to avoid past technological and administrative gaps. This Bill presents an improved, modern approach.

¶ 09 Thank you, Hon. Deputy Speaker.