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Unified VAT: Mixed fortunes for consumers

With the Value Added Tax moving to a unified figure of 15 percent the prices of several items including motor vehicles, electrical equipment and audio and video equipment will come down considerably from next year.

Infant and baby foods, powdered milk, cereals, fertiliser and crude oil which came under the 10 per cent VAT category will be exempt from taxation with effect from January. The reduction of the import surcharge to 10 per cent from 20 per cent will also bring down the prices of most imported goods.

As an incentive to the flourishing tourism industry, the hotel room tax has been waived off.

Unprocessed agricultural and horticulture products, fish products, eggs, spices, rice, flour, wheat, bread, liquid milk, pharmaceutical and ayurvedic products, books, kerosene and other VAT exempted goods and services will remain as tax exempted.

However the prices of sugar, lentils, Maldive fish, petrol, diesel, LP gas, bicycles and motorcycles are expected to go up from next year as VAT moves to 15 per cent from earlier ten percent. Prices of following goods will increase from January as a result of the VAT rise: Refrigerators, airconditioners, fans, CFL bulbs, generators, lawnmowers, domestic dishwashers, magazines/periodicals, cinema films, prawn feed, tea, coconut oil, potatoes, onions, chilies copra, live bird, chicken, unprocessed meat, dried fish and agricultural machinery. Among the services affected are construction, hotel services, film/stage shows, leasing and annual memberships of clubs/societies.

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