The Inland Revenue Department (IRD) has announced that, effective July 1, 2025, all Value Added Tax (VAT) returns must be filed electronically.
Manual submissions will only be permitted under exceptional circumstances with prior approval from the Commissioner General, the IRD stated.
In a separate announcement made earlier today (17), the IRD confirmed that locally produced liquid milk and yogurt are now exempt from VAT, following the enactment of the Value Added Tax (Amendment) Bill.
In addition to dairy products, VAT has also been removed on naphtha supplied by the Ceylon Petroleum Corporation (CPC) to the Ceylon Electricity Board (CEB) for electricity generation.
The amendment also introduces new obligations aimed at regulating the digital economy. Starting from October 1, VAT will be imposed on digital services provided by non-resident entities to consumers in Sri Lanka through electronic platforms, aligning the country with global practices for taxing cross-border digital transactions.
Moreover, the IRD announced that all individuals and entities engaged in the commercial import or export of goods must now register under the updated VAT framework.
The department clarified that the new VAT exemptions came into effect on April 11, the date on which the bill received parliamentary assent from Speaker Dr. Jagath Wickramaratne. The bill was passed in Parliament on April 9.
Additionally, the IRD noted that the VAT exemption on the import of aircraft engines and spare parts — identified under specified Harmonized Commodity Description and Coding System Numbers for customs purposes — has been lifted, effective April 11.
