Sri Lanka defers VAT on digital services to April 2026
The government of Sri Lanka has decided to postpone the introduction of an 18% Value Added Tax (VAT) on digital services provided by non-resident companies to local consumers.
The tax was originally scheduled to come into effect on October 1, 2025, under the Value Added Tax (Amendment) Act No. 4 of 2025.
However, Cabinet Spokesman Dr. Nalinda Jayatissa said several non-resident digital service providers had requested more time to comply with VAT requirements, citing practical challenges.
As a result, the government has proposed delaying the effective date of the tax to April 1, 2026. Draft amendments are now being prepared to reflect this change in the VAT Act.
The Cabinet of Ministers has also granted policy approval for the proposal, which was presented by the President in his capacity as Minister of Finance, Economic Stabilization, and National Policies.
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