The existing three-tier Value Added Tax (VAT) rates of 0, 9 and 15 per cent will be amended to two rates of 0 and 15 per cent in the new financial year.
Government will maintain the zero-rated VAT on the existing 21 essential items (flour, rice, sugar, canned fish, cooking oil, potato, onion, garlic, baby milk, powdered milk, liquid milk, dhal, tea, salt, soap, soap powder, toilet paper, sanitary pads, toothpaste, kerosene, cooking gas with the addition of listed prescribed medicines.
All other goods and services currently attracting 9 per cent VAT will be increased to 15 per cent.
This measure will bring in additional $445.6m revenue for the Government.
The new VAT will come into effect from 1 August 2023.
Meanwhile the planned further implementation of the VAT Monitoring System will be paused whilst the entire system will be reviewed.