Sri Lanka delays VAT implementation from 1 October 2025 to 1 April 2026 for compliance purposes.
Sri Lanka’s Cabinet has approved a postponement of the Value Added Tax (VAT) on digital services supplied by overseas companies to local users.
The announcement was made by the Office of the Cabinet of Ministers on 3 September 2025.
The tax, originally set to take effect on 1 October 2025, will now be implemented from 1 April 2026. The delay aims to provide non-resident service providers additional time to prepare for compliance with the new regulations.
Under the Value Added Tax (Amendment) Act, No. 4 of 2025, digital services provided by non-resident companies were to become subject to VAT starting 1 October 2025. However, foreign suppliers requested extra time to comply, citing practical challenges in implementing the changes.
Responding to these concerns, the President, in his capacity as Minister of Finance, Planning and Economic Development, proposed amending the effective date of the VAT to 1 April 2026.
The Cabinet has approved this proposal, and the necessary amendments are being incorporated into the draft Bill to revise the Value Added Tax Act.
This adjustment provides non-resident digital service providers a six-month window to align their operations with the new tax requirements, ensuring smoother compliance once the VAT takes effect.
