- Imposition of VAT on Digital Services Supplied by Non-Resident Persons:
VAT will be applied to services provided by non-residents through electronic platforms to individuals in Sri Lanka, effective October 1, 2025. Specific registration and compliance procedures will be defined by the Commissioner-General. - Abolition of the Simplified VAT Scheme & Introduction of Risk-Based Refund Mechanism:
The Simplified VAT Scheme will be replaced by a Risk-Based Refund Scheme from October 1, 2025. Eligible exporters with over 50% of supplies to specified projects will receive refunds within 45 days of VAT return submission. - Mandatory VAT Registration for Commercial Importers/Exporters:
All commercial importers and exporters must register under the VAT Act, eliminating any turnover thresholds or exemptions. - Zero-Rated Supplies:
Effective January 1, 2024, certain supplies will be treated as zero-rated for VAT, including meals and transport provided by employers to employees, reinsurance commissions to local insurers, and unused postage stamps. - Electronic Filing of VAT Returns:
All VAT returns must be filed electronically starting July 1, 2025, with manual submissions allowed only under exceptional circumstances approved by the Commissioner-General. - Definition of “Unprocessed Agricultural Products”:
A new definition for “unprocessed agricultural products” is introduced, covering products from cultivated plants that have undergone minimal preparation for sale. - New Exemptions (Effective from April 11, 2025):
New exemptions include the supply or import of chemical naphtha for electricity generation by the Ceylon Electricity Board and the supply of liquid milk and yogurt made from at least 50% locally produced fresh milk. - Removal of Exemptions (Effective from April 11, 2025):
The exemption for the import of aircraft engines or aircraft spare parts identified by specific Harmonized Commodity Description and Coding System Numbers has been removed.
Source Newswire
