The Government has encouraged Small and Medium-sized Enterprises (SMEs) with annual turnovers below the mandatory Value Added Tax (VAT) registration threshold of Rs. 60 million to register voluntarily, highlighting the benefits of doing so.

Deputy Minister of Economic Development Nishantha Jayaweera said voluntarily registered SMEs, particularly manufacturers, are eligible to claim input VAT on raw materials and certain services, helping to reduce production costs. Speaking to the media, he said VAT registration also enhances business credibility and enables enterprises to attract more customers, particularly businesses that prefer to purchase from suppliers capable of issuing VAT invoices.“By registering, SMEs not only benefit from input VAT but also attract more customers, as buyers prefer to deal with traders who issue VAT invoices,” Jayaweera said.He noted that businesses can opt for voluntary VAT registration regardless of their annual turnover, adding that the move would improve their competitiveness and support future expansion.Jayaweera also explained that the Government decided to retain the mandatory VAT registration threshold at Rs. 60 million instead of lowering it to Rs. 36 million after taking into account the economic impact of Cyclone Ditwah last year and the Middle East crisis, which led to higher fuel costs and increased commodity prices.