‘Nation Building Tax’ and amendments to taxes

The National Chamber of Commerce of Sri Lanka (NCCSL) will conduct an educative seminar on ‘Nation Building Tax and Amendments to other Taxes’ on July 2 from 2.30 pm to 5.30 pm in the Chamber Auditorium.

Among the business sector there is a number of issues to be clarified with regard to Nation Building Tax which was increased from 1 percent to 3 percent recently. It is important that the suppliers raise sales invoices in accordance with the tax requirements.

For this they should have a proper knowledge on tax liabilities such as Value Added Tax and Nation Building Tax which are computed on sale values/invoices. Suppliers should compute these taxes correctly in the invoices so that the customer could claim input credit for such taxes paid.

Importers are liable to pay Nation Building Tax at Customs and not at subsequent sales. However, the buying and selling are exempt from Nation Building Tax. Nation Building Tax is imposed on the supplier (unlike VAT) and therefore any recovery from the customer is also liable for additional VAT and Nation Building Tax (tax on tax principal). Nation Building Tax recovery should be worked out as 3/97 of the sales value and not 3/100. As such the actual percent of tax will become 3.09 percent and not 3 percent.

Thus the Nation Building Tax has some complicated areas which should be clearly understood by tax payers.