Sri Lanka: Tax reform proposals presented to Parliament include VAT on nonresident digital service providers
Proposals presented to Parliament by the president on December 18, 2024
The president on December 18, 2024, presented various tax reform proposals to Parliament, including:
- Increase in rate of advance income tax (AIT) on interest from 5% to 10%--effective April 1, 2025
- Introduction of concessionary corporate income tax rate of 15% on foreign service providers—effective April 1, 2025
- Increase in corporate income tax (CIT) rate from 40% to 45% on gains and profits from betting and gaming, manufacture and sale or import of any liquor or tobacco products—effective April 1, 2025
- Reintroduction of exemption from value added tax (VAT) for locally produced liquid milk and locally manufactured yogurt—effective April 1, 2025
- Introduction of 18% VAT on nonresident digital service providers to Sri Lankan consumers
- Increase in stamp duty on leases to 2%
Read a December 2024 report prepared by the KPMG member firm in Sri Lanka