Digital services VAT deferred to April 2026

Friday, 5 September 2025 00:32 - - {{hitsCtrl.values.hits}}

Cabinet Spokesman and Mass Media Minister Dr. Nalinda Jayatissa

The Cabinet of Ministers on Wednesday approved the postponement of VAT on digital services until April 2026, pushing back the original implementation date of 1 October 2025 to allow more time to address practical challenges.

Speaking at the weekly post-Cabinet meeting media briefing, Cabinet Spokesman and Mass Media Minister Dr. Nalinda Jayatissa yesterday said that the decision was taken after discussions with the International Monetary Fund (IMF), under whose program Sri Lanka had committed to broadening its tax base, including through VAT on digital services.

“Service providers requested additional time, and there were operational concerns that required ironing out before implementation,” Dr. Jayatissa explained.

The VAT expansion had raised concerns from both service providers and consumers, particularly regarding financial facilitators which act as intermediaries for credit card and bank transactions.

If these platforms were subject to VAT in addition to the services they process, analysts warned that Sri Lankan users could face an effective tax burden of nearly 36% on certain transactions.

The proposal to this effect was presented by President Anura Kumara Disanayake in his capacity as the Finance, Planning and Economic Development Minister.