A cornerstone of this new legislation is the formal introduction of VAT on services provided via electronic platforms. Starting July 1, digital service providers operating within the country will be required to register and remit taxes, ensuring that the digital economy contributes equitably to the national treasury. Provisions have been established to streamline the registration and payment process for these digital service entities.
The gazette also introduces a downward revision of the VAT registration threshold, as specified in Section 10 of the principal enactment. Under the new regulations, any person or business whose total taxable supply of goods or services within Sri Lanka exceeds Rs. 9 million for a given taxable period must register for VAT. This move is designed to bring a larger number of commercial entities into the formal tax net.
Furthermore, the government has proposed a notable increase in the VAT rate on financial services, raising it from the current 18% to 20.5%. This adjustment is expected to impact banking and financial institutions, reflecting the government's strategy to bolster domestic revenue amidst ongoing economic stabilization efforts.
