On Apr. 17, 2025, SRI Tax issued notice on the above value added tax amendments.
Non-resident persons supplying services through electronic platforms to Sri Lankan persons subject to VAT effective Oct. 1, 2025; simplified VAT scheme abolished from same date, replaced by risk-based refund scheme allowing refunds within 45 days.
Zero-rated supplies require payment in foreign currency through licensed Sri Lankan bank within six months from end of taxable period; input tax disallowance provision for failing to receive foreign currency payment only applicable until Apr. 10, 2025.
All commercial importers/exporters must register for VAT regardless of turnover thresholds or exemptions; certain supplies treated as zero value for VAT purposes effective Jan. 1, 2024, including employer-provided meals/transport, reinsurance commission in foreign currency, and unused government postage/revenue stamps.
Mandatory electronic filing of VAT returns from Jul. 1, 2025, with manual filing only allowed in exceptional circumstances; new definition for unprocessed agricultural products, clarifying VAT liability for eggs at standard 18% rate effective Jan. 1, 2024.
Exemptions effective Apr. 11, 2025: chemical naphtha supplied to Ceylon Electricity Board and liquid milk/yogurt containing at least 50% locally produced fresh milk.
Removal of exemption for import of aircraft engines/spare parts from Apr. 11, 2025.
On Apr. 11, SRI PRL passed the Value added tax (amendment) bill.
SRI PRL passed the Value added tax (amendment) bill in Parliament following its third reading, coming into force as the Value added tax (amendment) act, no. 04 of 2025.
Amendment Act
Imposes a tax liability on supply of services by a non-resident person by an electronic platform; abolishes Simplified value added tax scheme, introduces VAT refund system.
Reinsurance commission or any compensation received in foreign currency through a bank by any local insurance company from reinsurer outside Sri Lanka valued at zero.
Apr. 2025 SRI Tax Notice
On Apr. 17, 2025, SRI Tax issued notice on the above value added tax amendments.
Non-resident persons supplying services through electronic platforms to Sri Lankan persons subject to VAT effective Oct. 1, 2025; simplified VAT scheme abolished from same date, replaced by risk-based refund scheme allowing refunds within 45 days.
Zero-rated supplies require payment in foreign currency through licensed Sri Lankan bank within six months from end of taxable period; input tax disallowance provision for failing to receive foreign currency payment only applicable until Apr. 10, 2025.
All commercial importers/exporters must register for VAT regardless of turnover thresholds or exemptions; certain supplies treated as zero value for VAT purposes effective Jan. 1, 2024, including employer-provided meals/transport, reinsurance commission in foreign currency, and unused government postage/revenue stamps.
Mandatory electronic filing of VAT returns from Jul. 1, 2025, with manual filing only allowed in exceptional circumstances; new definition for unprocessed agricultural products, clarifying VAT liability for eggs at standard 18% rate effective Jan. 1, 2024.
Exemptions effective Apr. 11, 2025: chemical naphtha supplied to Ceylon Electricity Board and liquid milk/yogurt containing at least 50% locally produced fresh milk.
Removal of exemption for import of aircraft engines/spare parts from Apr. 11, 2025.
Regulators
SRI PRL; SRI Tax
Entity Types
Corp; Ins
Reference
Nt PN/VAT/2025-01 (Revised), 4/17/2025; PR, 4/11/2025
