IRD expands digital invoicing rollout as second phase gets underway

Tuesday, 9 June 2026 02:43 - - {{hitsCtrl.values.hits}}

The Inland Revenue Department (IRD) has commenced the second phase of Sri Lanka’s Digital Invoicing System, expanding the platform to Value Added Tax (VAT)-registered businesses following the successful onboarding of exporters under the initial rollout, according to the Finance, Planning and Economic Development Ministry.

The initiative is part of broader efforts to strengthen tax administration through digitalisation. By creating an electronic audit trail for transactions, the system aims to improve VAT compliance, reduce fraud, expedite refund processing, and support more efficient revenue collection.

The Ministry said the initiative, announced under the 2026 Budget, is being implemented through a phased approach aimed at improving tax administration efficiency, accelerating VAT refunds, and enhancing tax compliance as part of the country’s broader digital transformation agenda.

Under Phase I, which began in October 2025, more than 340 companies, including apparel exporters and tea producers operating through tea brokers, voluntarily joined the system. The Ministry said participating firms are already experiencing benefits, particularly through faster VAT refund processing enabled by system-based reconciliation mechanisms.

The second phase focuses on extending the platform to a wider pool of VAT-registered businesses on a voluntary basis. According to the Ministry, discussions are underway with large manufacturers and retail chains that have expressed interest in joining the system. Technical documentation and integration guidance have already been shared with 27 export-oriented companies and a further 170 VAT-registered manufacturers.

The Ministry said the response from the private sector reflects growing confidence in the initiative and its potential to improve efficiency while supporting a smoother transition to digital tax administration.

Phase III is expected to introduce Point of Sale (POS) systems for all VAT-registered entities, with implementation scheduled to commence by the end of the year. The required amendments to the VAT Act and operational guidelines will be issued by the Commissioner General of Inland Revenue.

The Ministry said businesses with Enterprise Resource Planning (ERP) systems and other digital platforms will be able to integrate directly with the Revenue Administration Management Information System (RAMIS) through web Application Programing Interface (API) connections, enabling automated and real-time data exchange.

The Ministry described the Digital Invoicing System as a key step in modernising tax administration, improving transparency, and strengthening revenue collection while reducing administrative burdens on businesses.