Colombo, September 4: The Sri Lanka government has postponed the implementation of the 18% Value Added Tax (VAT) on digital services provided by non-resident companies to April 1, 2026, instead of the earlier deadline of October 1, 2025.
The levy, introduced under the Value Added Tax (Amendment) Act No. 4 of 2025, requires international digital service providers to register for VAT in Sri Lanka. A gazette notification in July had set the compliance deadline for October 2025.
However, after multiple requests from global digital service companies citing practical and technical challenges, the Cabinet agreed to grant them more time.
“Several digital service providers have requested to delay citing various practical difficulties. They requested more time to prepare to be able to comply,” a Cabinet note released Thursday confirmed.
The new deadline aims to give companies sufficient time to adapt their systems and ensure smooth implementation once the VAT comes into effect in 2026.