- Sri Lanka plans to charge 18 percent VAT on Paypal and Stripe under new rules for taxing foreign services.
- Paypal is exempt from VAT in countries with well-functioning tax systems like the UK and EU.
- Stripe is subject to a reverse charging process in countries with efficient tax systems.
- Charging VAT on services like Paypal and Stripe allows the state to collect VAT from smaller transactions.
- Sri Lanka’s tax system includes a financial VAT, unlike other countries.
- A 2.5 percent tax on foreign credit card purchases is considered a violation of IMF rules.
- Sri Lankans may pay more than twice the VAT rate when using Paypal due to additional credit card taxes.
- The IMF program requires Sri Lanka not to introduce new multiple currency practices.
- It is unclear if VAT on Paypal and Stripe would violate IMF rules.
- A government committee will address concerns about taxing e-commerce platforms.
Source: economynext.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
