The Ministry of Financial Planning and Economic Development has issued a Gazette notification setting out amendments to the Value Added Tax system, with the changes scheduled to take effect from July 1, Daily Mirror and Ada Derana reported on Sunday.
According to the Daily Mirror’s read of the Gazette, VAT will be imposed on services provided through electronic platforms from the effective date — extending the tax base to cover digital services for the first time. The change closes the long-running gap that has allowed non-resident digital service providers — including streaming platforms, app stores and SaaS vendors — to sell to Sri Lankan consumers without remitting VAT, while local digital businesses already do so.
The Gazette is the formal legislative step behind the long-delayed digital-services VAT measure. The Inland Revenue Department had postponed implementation to July 1 in early April — the third delay since the measure was first proposed in 2024 — citing requests from industry stakeholders for additional preparation time. That postponement remained “subject to formal amendment of the VAT Act”; Sunday’s Gazette is the instrument that satisfies that condition.
Closure of the digital services tax gap has been on the IMF programme’s revenue-base agenda since the original Extended Fund Facility design in 2023. Tax administration capacity to register and collect from non-resident vendors will be the next operational test.
The Finance Ministry is expected to publish further implementation guidance ahead of the July 1 effective date.
Sources: Daily Mirror, Ada Derana.
