Sri Lanka to Implement 18% VAT on Cross-Border Digital Services

Sri Lanka will impose an 18% VAT on digital services supplied by non-resident companies to local consumers starting 1 October 2025, requiring foreign providers to register and remit VAT if thresholds are met.
The VAT applies to a broad range of digital services, including cloud computing, SaaS, e-commerce, digital marketing, cybersecurity, IT support, streaming, FinTech, and blockchain-related platforms.
Registration is mandatory for providers exceeding LKR 60 million in taxable supplies annually or LKR 15 million over three months, with penalties for non-compliance.
The regulation aligns Sri Lanka’s VAT system with global digital tax standards, ensuring foreign digital providers comply with tax obligations when serving local consumers.