- Sri Lanka’s Value Added Tax (Amendment) Bill introduces major changes targeting digital services, non-resident suppliers, compliance, and VAT rates, effective retrospectively from 1 October 2025.
- VAT on financial services will increase from 18% to 20.5% from 1 July 2026, and the VAT registration threshold will be lowered to LKR 9 million per quarter or LKR 36 million annually.
- Non-resident digital service providers must register for VAT if their turnover exceeds the new thresholds, with specific rules to determine if a customer is in Sri Lanka.
- Certain digital services, such as educational and healthcare services provided by non-residents, will be VAT-exempt.
- The bill introduces stricter compliance measures, including mandatory use of secured POS machines, transparency requirements, and tougher penalties for VAT refund fraud.
Source: regfollower.com
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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