Sri Lanka is ready to tax the digital services supplied by non-Sri Lankans from October 1.
This was legalised by the certification of VAT (amendment) Act No. 4 of 2025.
Inland Revenue Department said in a press release that procedures for registration, payment and compliance would be specified by the Commissioner General in due course.
However, taxing foreign services involved many complications, such as the point in the transaction the VAT is applied on services provided by non-resident digital service providers like Google and Meta. Some of these companies do not have local agents or offices. Charging VAT at the point of payment such as through the payment gateway, is considered as a probable solution.
Sources say the government is in discussion with many non-residential service providers.
In India, the consumer has to pay the VAT directly if the supplier is not registered locally.
