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Sri Lanka: VAT on nonresident digital service providers effective July 1, 2026, other VAT amendments

Including increased 20.5% VAT rate on financial services rate effective July 1, 2026

may 4, 2026

Legislation introducing the following VAT amendments was issued on April 29, 2026:

  • New annual VAT registration threshold of LKR 36 Mn (reduced from LKR 60m)
  • Increased 20.5% VAT rate on financial services rate effective July 1, 2026
  • VAT on nonresident digital service providers effective July 1, 2026

Read a May 2026 report prepared by the KPMG member firm in Sri Lanka

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