- 20.5% VAT replaces 18% VAT plus 2.5% SSCL, leaving the effective tax burden on financial services unchanged.
- No material impact on financial sector profitability is expected.
- The change is structural, not expansionary, and takes effect from 1 July 2026, pending approval.
- Technical adjustments clarify tax treatment of emoluments and dividend income, with no significant change in liability.
- Broader amendments include a lower VAT registration threshold, VAT on non-resident digital services, and stricter compliance measures.
Source: ft.lk
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.
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