Sri Lanka taxes non-resident digital services at 18%
This page records one dated change. For the rules in Sri Lanka as they stand today, see the Sri Lanka guide →
- Jurisdiction
- Sri Lanka
- Tax
- VAT
- Change type
- Digital services
- Status
- In force
- Announced
- 1 July 2026
- Effective
- 1 July 2026
- Authority
- Inland Revenue Department, Sri Lanka
- Verified
- Corroborated against official id · high confidence
Non-resident digital-service providers selling to Sri Lankan consumers, once supplies pass LKR 36 million in any 12 months or LKR 9 million in a taxable period. Banks and insurers are hit separately: VAT on financial services rises from 18% to 20.5%.
From 1 July 2026 Sri Lanka applies 18% VAT to digital services supplied by non-resident providers to local consumers (after two earlier postponements); a non-resident provider must register once its supplies exceed LKR 36 million in any 12 months or LKR 9 million in a taxable period. The same amendments raise VAT on financial services from 18% to 20.5% and lower the general VAT registration threshold to the LKR 36 million / LKR 9 million levels. The standard VAT rate stays at 18%.
What changed in detail
From 1 July 2026 Sri Lanka applies 18% VAT to digital services supplied by non-resident providers to local consumers, after two earlier postponements. A non-resident provider must register once its supplies exceed LKR 36 million in any 12 months or LKR 9 million in a taxable period. The same amendments raise VAT on financial services from 18% to 20.5% and lower the general VAT registration threshold to those LKR 36m / LKR 9m levels. The standard VAT rate stays at 18%. (Inland Revenue Department)
What it means
Sri Lanka joins the global wave taxing non-resident digital supplies, and the financial-services increase consolidates a previously separate levy into the VAT rate — a real cost rise for banks and insurers.
Proof
Act, No 14 of 2026 [Certified on 30th June 2026] Chargeability for Value Added Tax excluding chargeability on Financial Services Manufactures Importers Exporters Services providers Suppliers who supply goods under tender agreement Wholesale and Retail Trade Supply of service by Non – Resident person through electronic platform Registration Threshold Value of taxable supply of goods or services other than financial services by any person including whole sale and retail trade (with effect from 01.01.2024) exceeds Rs.
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