Sri Lanka lowers its VAT registration threshold to LKR 60 million a year from 1 January 2024

What changed in detail

The Value Added Tax (Amendment) Act, No. 16 of 2024 was certified on 20 March 2024 and published as a supplement to the Gazette on 22 March 2024. Section 3 amends section 10(1) of the Value Added Tax Act, No. 14 of 2002.

A new paragraph (viii) applies to anyone carrying on taxable activity in Sri Lanka on or after 1 January 2024. Such a person must register if:

• at the end of any taxable period, its taxable supplies in Sri Lanka for that period exceeded LKR 15 million;
• over the twelve months then ending, its taxable supplies in Sri Lanka exceeded LKR 60 million; or
• there are reasonable grounds to believe its taxable supplies will exceed LKR 15 million in the next taxable period or LKR 60 million in the next twelve months.

The previous test, in paragraph (vii) as set by Act No. 44 of 2022 (LKR 20 million per taxable period, LKR 80 million per year), is limited to the period up to 31 December 2023.

A new proviso states that, for paragraph (viii), the registration requirement arises from the date on which the Amendment Act came into operation.

What it means

The LKR 60 million annual and LKR 15 million per-period tests are still in force in November 2026. A 2026 bill proposed cutting them to LKR 36 million and LKR 9 million, but that cut was dropped before enactment, so the 2024 figures stand; see the 2026 record.

The proviso matters for 2024: although the new test counts supplies from 1 January 2024, the duty to register under it arose only when the Act came into operation. A business caught only by the lower figures was therefore not in default for the months before the Act, which is worth knowing when reviewing early-2024 registrations.