Sri Lanka to Impose VAT on Digital Services from July 1, 2026

VAT will be imposed on services provided through electronic platforms in Sri Lanka from July 1, 2026, under new amendments issued by the Ministry of Finance, Planning and Economic Development.

The amendments were published through a Gazette notification and will come into effect from the same date.

Under the new provisions, persons who supply taxable goods, services, or both within Sri Lanka exceeding Rs. 9 million during a taxable period will be required to register for VAT.

The amendments also propose to increase the VAT rate on financial services from 18 percent to 20.5 percent.

Provisions will also be introduced for the registration and payment of VAT on digital services, as Sri Lanka moves to bring electronic platform-based services into the tax system.

The Inland Revenue Department had earlier said the implementation of VAT on services supplied through electronic platforms by non-resident service providers was postponed until July 1, 2026, subject to a formal amendment to the VAT Act.

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