Sri Lanka Introduces 18% VAT on Cross-Border Digital Services

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.
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.
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.
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.

Digital Services Tax