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Sri Lanka: Amendments to VAT Act

Key amendments introduced by the Value Added Tax (Amendment) Act No. 14 of 2026, enacted on June 30, 2026.

July 17, 2026

The Inland Revenue Department (IRD) issued a notice (dated July 3, 2026) outlining the key amendments introduced by the Value Added Tax (Amendment) Act No. 14 of 2026, enacted on June 30, 2026. The amendments address:

  • Value of a taxable supply for film exhibition services (effective July 1, 2026)
  • Zero-rated supply
  • Continuation of VAT registration thresholds
  • VAT on services supplied through electronic platforms by nonresident persons
  • Submission of VAT schedules.
  • Disallowance of input tax on imports for projects (effective July 1, 2026)
  • VAT rate change for the supply of financial services (effective July 1, 2026)
  • Write-off of tax in default under the VAT Act in relation to tsunami relief projects
  • Use of secured point-of-sale (POS) machines by VAT-registered persons
  • Increased penalties for tax fraud and willful tax evasion or fraudulent refund claims
  • Increased penalties for offences relating to VAT returns and compliance
  • Criminal proceedings for offences under the VAT Act (effective July 1, 2026)
  • Publication of information relating to VAT-registered persons 
  • New interpretations added to section 83 of the VAT Act
  • New exemptions (effective July 1, 2026)

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

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