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.
Under the Value Added Tax (Amendment) Act No. 4 of 2025, the tax was originally scheduled to take effect on October 1, 2025. However, following requests from non-resident digital service providers for more time to comply with VAT requirements, the effective date has been postponed to April 1, 2026.
Cabinet Spokesman Dr. Nalinda Jayatissa explained that the decision was made due to several practical challenges raised by international service providers. He added that draft amendments are now being prepared to incorporate the revised timeline into the Value Added Tax Act.
The Cabinet of Ministers has granted policy approval for the proposal, which was presented by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Economic Stabilization, and National Policies.
