Sri Lanka has postponed the introduction of VAT on non‑resident digital services to 1 July 2026, from the originally planned 1 April. The amendment imposes an 18 % VAT on B2C digital and electronic services, aligning the country with over 120 other jurisdictions. Guidance on registration and compliance will be released in 2027, while local providers already pay 18 % VAT and B2B services are expected to be zero‑rated.
From 1 July 2026, they must charge 18 % VAT on B2C digital services.
The threshold is LKR 60 million per annum (≈$185,000).
B2B transactions are expected to be zero‑rated under the reverse charge mechanism.
Guidance is expected to be issued in 2027 (next year).
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