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Sri Lanka expands VAT to cover digital services supplied by non-resident providers through electronic platforms. Overseas vendors must register locally, charge 18% VAT, and remit tax on sales to Sri Lankan consumers.
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Originally set for October 1, 2025, the new rules were postponed to April 1, 2026, following industry requests for more preparation time, with Cabinet approval to defer implementation.
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The Amendment Act defines key terms, including “electronic platform,” “fixed place,” and “non-resident person,” clarifying scope for compliance. Marketplace facilitators may also face VAT reporting obligations for third-party sellers.
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B2B digital services remain subject to reverse charge. The reform aligns Sri Lanka with 120+ countries applying VAT to foreign digital providers, covering streaming, gaming, SaaS, e-learning, and similar services.
Source: www.fonoa.com
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