- The President of Sri Lanka has proposed key tax reforms for 2025 to the national Parliament
- One major change is the introduction of VAT for foreign digital service providers starting April 1, 2025
- These providers will need to charge, collect, and remit VAT for services provided to customers in Sri Lanka
- The government aims to level the playing field between domestic and foreign digital service providers
- Discussions with the IMF influenced the decision to impose VAT on foreign digital platforms and service providers
- A standard VAT rate of 18% will be applied to these services
- Sri Lanka follows other Asian countries in taxing non-resident digital service providers
- The Ministry of Finance also plans to introduce Corporate Income Tax for these providers
- The new VAT obligations will alter the tax landscape, affecting tax authorities, customers, and service providers
- Tax authorities will develop new systems for registration and tax collection
- Customers may see price increases for digital services
- Service providers will face compliance costs
- Platform operators and third-party service providers should review VAT compliance requirements for their operations in Sri Lanka
Source: 1stopvat.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
