The Government of Sri Lanka prepared a Bill to amend the VAT Act, and the sections of the amendment regarding the introduction of VAT liability for the provision of digital services by non-resident digital service providers from July 1, 2026.
Timeline
The bill is currently under review by the national Parliament.
Impact
If the Bill gets greenlight from the Parliament, without any revision when it comes exclusively to the tax provisions that mandate the introduction of the new tax regime for non-resident digital service providers, the identified providers shall be obliged to collect and remit VAT on these supplies from July 1, 2026.
One also noteworthy change is the reduction of the registration threshold from, the currently fixed annual registration threshold at Rs. 60 million or quarterly Rs. 15 million, to Rs. 36 million annual, and Rs. 9 million quarterly.
Non-resident digital service providers that make B2C supplies of taxable digital services shall be obliged to register, collect, and remit VAT from July 1, 2026.
In the upcoming weeks, Parliament will give its final decision on these provisions.
Stay tuned.
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