Synergy Business Solution
Summary: Gazette Notification – VAT on Digital Services (2443/30)
Issued under: Value Added Tax Act, No. 14 of 2002 (as amended)
Published by: Ministry of Finance, Sri Lanka
Gazette Number: 2443/30
Date: 31st May 2024
Key Highlights:
Scope of the Regulation:
Applicable to non-resident suppliers providing digital services to customers in Sri Lanka.
Aimed at capturing VAT from cross-border B2C digital transactions.
Digital Services Covered:
Software applications (including downloads and SaaS)
Streaming services (video, music)
E-books, online games, cloud storage
Digital advertising platforms, and other electronic content.
VAT Registration Requirement:
Non-resident digital service providers must register for VAT in Sri Lanka if they supply digital services to consumers located in Sri Lanka.
Tax Rate:
Standard VAT rate of 15% is applicable.
Filing & Payment Obligations:
VAT returns must be submitted quarterly.
Payment of VAT must be done in Sri Lankan Rupees (LKR).
Returns and payments are to be submitted electronically via the IRD portal.
Compliance Mechanism:
Simplified VAT registration process for non-residents.
Must appoint a representative in Sri Lanka (if necessary) for VAT compliance purposes.
Enforcement & Penalties:
Non-compliance may result in penalties, interest, and legal action under VAT law.
Effective Date:
Comes into force from 1st July 2024.
Purpose of the Regulation:
To expand the VAT base by including foreign digital service providers and ensure fair taxation between domestic and foreign digital suppliers.
Published Date : 7th July 2025
The revised Individual Taxpayers Privilege Card application is now officially released.
4th July 2025
Great News for Tourists!
The Inland Revenue Department has officially announced the launch of the Tourist VAT Refund Scheme, starting 04.07.2025. Departing travelers can now claim their VAT refunds at the Bandaranaike International Airport departure terminal, provided that they meet eligibility criteria.
4th July 2025
The RAMIS portal is now open for taxpayers to file their Partnership Return of Income (PIT) for the year of assessment 24/25 well ahead of schedule.
This early access provides valuable time for partnerships to prepare and submit their returns with greater convenience and compliance readiness.
4th July 2025
🔔 Public Notice Summary – VAT Amendments (Act No. 4 of 2025)
Issued by: Inland Revenue Department, Sri Lanka
Notice No.: PN/VAT/2025-01 (Revised)
Date: 17th April 2025
Legal Reference: Value Added Tax (Amendment) Act, No. 04 of 2025
Effective From: Various dates specified below
🟡 Key Changes Introduced:
1. VAT on Digital Services from Non-Residents
Effective Date: 1st October 2025
Applies to non-resident service providers offering digital services via electronic platforms to customers in Sri Lanka.
Definitions of electronic platform, non-resident person, and fixed place are clarified in the Act.
Registration, payment, and compliance guidelines will be issued by the Commissioner-General.
2. Abolition of Simplified VAT Scheme
Effective Date: 1st October 2025
Replaced by a Risk-Based Refund Mechanism for:
Eligible exporters
Suppliers with over 50% of supplies to strategic or specified projects
Refunds to be made within 45 days from the due date of VAT return submission.
3. Zero-Rated Supply Rules Updated
Zero-rating applies only if foreign currency payment is received via a licensed local bank within 6 months of the taxable period.
The clause denying input tax on non-compliance is repealed from 10th April 2025.
4. Mandatory VAT Registration for Commercial Importers/Exporters
No threshold: All engaged in commercial import/export must register under the VAT Act.
5. Certain Supplies Treated as Zero-Rated (From 1st Jan 2024)
Employer-provided meals or transport (outsourced or in-house).
Reinsurance commissions received in foreign currency.
Unused government postage/revenue stamps (to face value).
6. Compulsory e-Filing of VAT Returns
Effective Date: 1st July 2025
Manual returns only under exceptional approval by the Commissioner-General.
7. Definition Introduced: “Unprocessed Agricultural Products”
Includes cleaned, sorted, chilled items without full processing.
Note: VAT on eggs at 18% continues (unrelated to this new definition).
8. New VAT Exemptions (From 11th April 2025)
Import/supply of chemical naphtha to CEB for power generation.
Locally produced liquid milk/yogurt (must contain at least 50% fresh milk).
9. Removal of VAT Exemption
Aircraft engines/spare parts now taxable from 11th April 2025 (as per custom classifications).