The Finance Ministry announced that the effective date, which was previously scheduled for October 2025, has now been postponed to April 2026.

Addressing the post-Cabinet media briefing held today, Cabinet Spokesman Nalinda Jayatissa said that the reason for the delay was due to requests by those involved in the said digital services.

He further said that the government had engaged with them, during which they had requested time to prepare in this regard.

Minister Jayatissa also said that discussions were held with the International Monetary Fund (IMF) on the matter.

“We will fix the shortcomings in this regard, after which the VAT will be introduced. Hence, the postponement in the date of implementation,” he said. (Newswire)

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President Donald Trump vowed Monday to impose “substantial” new tariffs and restrict U.S. chip exports for all countries that do not remove digital taxes and related regulations.

Trump wrote on Truth Social that digital services taxes, or DSTs — which are currently imposed by dozens of countries — “are all designed to harm, or discriminate against, American Technology.”

“I put all Countries with Digital Taxes, Legislation, Rules, or Regulations on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A.,” Trump wrote.

He added that the U.S. would also “institute Export restrictions on our Highly Protected Technology and Chips.”

“Show respect to America and our amazing Tech Companies, or consider the consequences!” Trump wrote.

Trump has long sought to pressure U.S. trade partners into dropping the taxes, which are typically structured to apply only to the world’s largest and most established tech companies, like Meta, Alphabet and Amazon. They also happen to be American companies.

Digital service taxes have already proven to be a potential make-or-break issue for Trump in his administration’s ongoing trade negotiations.

The countries which enact digital services taxes argue that massive tech titans like Amazon operate within their borders and generate huge profits from their citizens while paying little or no taxes to the respective governments.

Sri Lanka is also set to impose indirect taxes on the cross-border supply of services provided through electronic platforms, a key reform in the 2025 Budget proposal for Sri Lanka, shaped in part by ongoing discussions with the International Monetary Fund (IMF).

The reform broadens the value-added tax (VAT) base to include non-resident persons providing services through electronic platforms, even in the absence of the service provider having a fixed place of business in Sri Lanka.

The applicable VAT rate in Sri Lanka will be 18 per cent, effective from 1 October 2025. (CNBC/ Newswire)

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Sri Lanka Customs has highlighted the need to impose a tax on the importation of digital content, such as software.

According to the first report of the Parliamentary Committee of Ways and Means, the requirement was raised considering the growth of the domestic information and Communication Technology (ICT) sector.

Sri Lanka Association for Software Services Companies (SLASSCOM) data states the ICT sector in Sri Lanka became the third highest exporter in 2022 with US$ 1.5 billion in export revenue and has a workforce of over 150,000 employees.

The Morning reports that in the first half of 2023, Sri Lanka Customs recorded a revenue of Rs. 400 billion, against an annual revenue target of Rs. 1.2 trillion which was later revised to Rs. 970 billion. 

However, Sri Lanka Customs had initially presented the committee with a forecasted revenue of Rs. 638,673 million for the year 2023 by analyzing the trends for the year.

Therefore, the Parliamentary Committee recommended that the Harmonized System Codes (HS codes) and a digital tax for digital content and services be introduced.

The Committee also recommended that the measures be taken after conducting a comprehensive study on the impact of the new tax on the ICT sector and the best practices of other countries. (NewsWire)

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