ECONOMYNEXT – Sri Lanka’s will start charging value added tax on service supplied by non-resident persons through electronic platforms from October 01, the Department of Inland Revenue said.
The tax change is part of efforts to boost revenues under an International Monetary Fund program, after extreme macro-economic policy involving rate cuts with printed money and VAT reductions led to an external default.
“VAT will apply to services supplied by non-resident persons through electronic platforms to persons in Sri Lanka, with effect October 1, 2025,” the tax agency said in a notice.
“Procedures for registration, payment, and compliance will be specified by the Commissioner-General in due course. The terms ‘electronic platform’, ‘fixed place’, and ‘non-resident person’ are defined in the VAT Act.”
Supply of Naptha by state-run Ceylon Petroleum Corporation to the Ceylon Electricity Board will be exempt from VAT.
All persons importing or exporting goods for commercial purposes will be required to register under the VAT Act, regardless of turnover thresholds or exemptions, Inland Revenue said.
Meals and transport provided by employers to employees (within specified conditions), Reinsurance commissions and foreign currency compensation to local insurers nd Unused government or provincial council postage/revenue stamps will be treated as zero rated.
The supply of liquid milk and yoghurt, produced out of locally produced fresh milk.
To qualify for the exemption, the liquid milk or yoghurt must contain at least 50 percent, locally produced fresh milk.
Sri Lanka has extraordinarily high import taxes on dairy products which has made them luxury goods, according to critics. (Colombo/Apr17/2025)