Impact of New VAT on Software and Digital Service Providers in Sri Lanka

• Sri Lanka’s VAT rate is set to increase to 18% next year
• Software and digital service providers will be affected by the VAT increase
• The government expects the VAT increase to generate significant revenue
• The estimated revenue from the VAT increase is around Rs. 227 billion
• Representatives of software and digital service providers have expressed concerns about the VAT hike
• Currently, these providers are exempt from VAT, but this exemption will be withdrawn from January 1, 2024
• Export-oriented providers will still be exempt from VAT
• The tax revenue from the VAT increase will be used for research on AI and other technologies
• The international standard for VAT on software and digital service providers is based on the authority of the consumer, not the jurisdiction of the business.

Source: sundaytimes.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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