KPMG flags urgent compliance prep after SVAT repeal

WITH the abolition of the Simplified VAT (SVAT) scheme expected to tighten liquidity and trigger short-term cash pressures for exporters and project suppliers, KPMG Sri Lanka is urging firms to begin compliance preparations immediately.

- 

The firm advises businesses to verify their eligibility under the new Risk-Based VAT Refund Scheme, which took effect on 1 October, and ensure operational readiness in the Revenue Administration Management Information System (RAMIS) for electronic refund processing.

The Inland Revenue Department (IRD) has issued a regulation under Section 22(5)(F) of the Value Added Tax Act, No. 14 of 2002 (as amended), introducing “The Operation of Risk-Based Refund Scheme,’ effective 1 October.

The new framework and transitional provisions are detailed in IRD Gazette Notification No. 2456/02 dated 29 September 2025, according to KPMG in Sri Lanka’ latest Tax Flash News. Eligible persons will be entitled to VAT refunds within 45 days from the due date to lodge their return, which must be submitted electronically via the RAMIS.

Under the new regime, eligibility for refunds will extend to exporters and suppliers engaged in specified projects.

According to the Gazette, ‘Eligible Exporters’ are registered persons whose value of zero-rated supplies during the preceding calendar year was greater than 50% of total supplies, based on the VAT return data for 2024, which will be reviewed annually thereafter.