Sri Lanka defers implementation of digital services tax

Colombo, Sep 4 (PTI) Sri Lanka has delayed until April 1, 2026 the implementation of the new 18 per cent levy on digital services provided by non-resident companies, it was announced Thursday.

The new amendment to Value Added Tax (VAT) Act No 4 of 2025 was to be implemented from October 1 this year.

“Several digital service providers have requested to delay citing various practical difficulties. They requested more time to prepare to be able to comply,” a cabinet note after the meeting on Wednesday said Thursday. The international service providers are required to register for VAT in Sri Lanka, according to a gazette issued in July.

Accordingly, e-commerce services, cloud computing, software as a service, cybersecurity services, digital marketing and advertising, IT support services, streaming services, social media platforms, content sharing platforms, cloud collaboration platforms, market place platforms, gaming platforms and apps for hotel bookings and ticket reservations became liable to pay VAT locally.

VAT registration, however, was applicable to digital businesses with a turnover of Rupees 60 million per annum or Rupees 15 million during the last three months. PTI CORR NPK NPK