Sri Lanka removes VAT on local liquid milk and yogurt

According to the Inland Revenue Department (IRD), domestically produced liquid milk and yogurt have been exempted from VAT under the Value Added Tax (Amendment) Bill.

Issuing a statement, the department pointed out that, with effect from April 11, 2025, VAT on liquid milk and yogurt has been removed.

The announcement also states that, to qualify for this exemption, the liquid milk products must contain at least 50% fresh milk.

The Value Added Tax (Amendment) Bill was passed in Parliament on April 9, 2025, and the Speaker, Dr. Jagath Wickramaratne, endorsed the bill on April 11, 2025.

Accordingly, as the Act came into effect on that date, the Inland Revenue Department has taken steps to implement several tax revisions.

In addition to liquid milk and yogurt, VAT has also been removed on naphtha supplied by the Ceylon Petroleum Corporation (CPC) to the Ceylon Electricity Board (CEB) for electricity generation.

Under the new VAT amendment law, it has also been decided to impose VAT on digital services provided by non-resident individuals.

Therefore, with effect from October 1, 2025, VAT will apply to services provided to individuals in Sri Lanka through electronic platforms by non-resident individuals, the department said.

Furthermore, it has been made mandatory for all individuals who import or export goods for commercial purposes to register under the Value Added Tax (Amendment) Act.

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