Sri Lanka, July 7 -- The government will introduce an 18% Value Added Tax (VAT) on digital services provided by non-resident companies to local consumers, effective October 1, 2025.

Accordingly, foreign service providers are required to register for VAT in Sri Lanka and collect the tax on their services.

The VAT law was updated through the VAT (Amendment) Act No. 4 of 2025, which implemented VAT on digital services.

The Inland Revenue Department has also published detailed guidelines through the Gazette Notification 2443/30, on this new digital tax.

Accordingly, the new VAT rules define terms such as "electronic platform" and "non-resident person," and impose obligations on foreign digital service providers to charge and remit VAT on ...