The government has decided to defer the implementation of the 18% Value Added Tax (VAT) on digital services provided by non-resident companies to Sri Lankan consumers.
Originally scheduled to take effect on 1st of October 2025, under the Value Added Tax (Amendment) Act No. 4 of 2025, the tax will now be enforced from 1st of April 2026.
Cabinet Spokesman Dr. Nalinda Jayatissa explained that non-resident digital service providers had requested more time to comply with VAT requirements due to practical challenges in implementation.
Accordingly, draft amendments are being prepared to revise the VAT Act to reflect the new timeline.
The Cabinet of Ministers has also granted policy approval for the proposal, which was presented by the President in his capacity as the Minister of Finance, Economic Stabilization, and National Policies.
