Sri Lanka’s Construction Sector Reels from VAT Hike, Sees 20% Surge in Expenses

January 06, Colombo (LNW): M.D. Paul, Chairman of the National Construction Association of Sri Lanka, expressed deep concerns over the significant surge in construction costs, marking a 20% increase. This spike, attributed to the recent VAT hike effective from January 1, 2024, has created a dire crisis within the construction industry.

Paul highlighted the industry’s plight, emphasizing the adverse impact of including fuel under the VAT purview. The expansion of VAT applicability to various essentials, previously exempted, such as machinery, electricity, and light bulbs, has notably escalated construction expenses.

The consequential rise in costs, estimated at 20%, presents a challenging scenario for the construction sector, significantly impacting ongoing and future projects. The inclusion of these crucial construction components under VAT has amplified financial burdens and poses a considerable threat to the industry’s stability.