Through the 2016 budget, the VAT tax was amended to a three tier system ranging from zero percent to 12 percent as opposed to the fixed 11 percent.
Accordingly, the Finance Ministry says, most essential items will fall under the zero VAT system.
Finance Minister Ravi Karunanayake said water, electricity and telecommunication will fall under the zero VAT system.
He said that VAT cannot be charged from consumers for water, electricity and telecommunication services and so there cannot be a price hike on the three items. (Colombo Gazette)