Accordingly, the 7.5% PAL on fuel and the 2.5% PAL imposed on Liquefied Petroleum (LP) gas will be lifted when the increased 18% VAT comes into effect on 1 January 2024, Advisor on Tax Policy to the Ministry of Finance Thanuja Perera explained.

The VAT (Amendment) Bill was passed in the parliament on 11 December by a majority of 45 votes, with 100 MPs voting in favour, and 55 voting against it.

The Bill subsequently came into effect as the VAT (Amendment) Act No.32 of 2023. Accordingly, a hike in VAT up to 18% from the current 15% had been green-lighted.