Prime Minister Harini Amarasuriya says the government is making every effort to introduce a change to the VAT currently imposed on books.

Speaking at the opening of the 27th Colombo International Book Fair, the Prime Minister said President Anura Kumara Dissanayake had personally spoken to her and asked her to convey the government’s position on the issue.

“The President called me today specifically and asked me to say this. He said we are making every possible effort, and we hope we will be able to make a change to the VAT currently imposed on books,” the Prime Minister said.

Amarasuriya also highlighted the importance of printed books despite the increasing use of digital technology, noting the role reading plays in developing understanding and analytical skills.

She described the Colombo International Book Fair as more than an annual exhibition, saying it has become part of Sri Lanka’s cultural life and is an event awaited by hundreds of thousands of people each year.

The 27th Colombo International Book Fair is organised by the Sri Lanka Book Publishers’ Association. (Newswire)

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President Anura Kumara Dissanayake has announced that the government will abolish the Value Added Tax (VAT) on school books, a measure he described as part of broader efforts to ease financial pressures on families. 

Speaking at a public rally in Nochchiyagama, he said the proposal is expected to be detailed in the upcoming Budget.

The President said plans are already being drawn up to remove the tax, underscoring the administration’s commitment to reducing everyday costs for the public.

In addition to the tax relief, President Dissanayake revealed that the government will absorb 121,000 new recruits into the state sector, including around 23,000 teachers. 

He noted that strengthening the economy would enable greater investment in education and other areas critical to the country’s future. (Newswire)

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The Inland Revenue Department (IRD) has issued reminders to taxpayers regarding the deadlines for the Social Security Contribution Levy (SSCL) and Value Added Tax (VAT) payments and returns for July 2026.

According to the notice, SSCL payments for July must be made on or before August 20, 2026. 

Taxpayers are encouraged to use the Online Tax Payment Platform (OTPP) or pay through any branch of the Bank of Ceylon. Officials warned that late payments will attract penalties. The SSCL payment details include Tax Type Code 32, Period Code 26301, and Payment Category S.

Similarly, VAT payments for July are due by August 20, 2026, with returns required to be furnished online by August 31, 2026. 

The VAT payment details specify Tax Type Code 70, Period Code 26310, and Payment Category S, while the return filing details highlight Monthly frequency, Period July, and Return Period Code 2631.

The Department emphasized that penalties will be imposed for late or incorrect submissions. It also noted that input tax credits on local purchases and imports will be disallowed if VAT returns are filed late, credits on local purchases must be claimed within 12 months, and credits on imports within 24 months from the due date.

Taxpayers are advised to ensure timely compliance to avoid penalties and safeguard their eligibility for input tax credits. For assistance, the Inland Revenue Department has provided hotline 1944 and further guidance through its official website. (Newswire)

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The government has underscored the advantages available to Small and Medium-sized Enterprises (SMEs) that voluntarily register for Value Added Tax (VAT), even if their annual turnover is below the Rs. 60 million threshold.

Deputy Minister of Economic Development Nishantha Jayaweera, speaking to the media, said VAT-registered SMEs, particularly manufacturers, can claim input VAT on raw materials and certain services.

He noted that such businesses can also expand by attracting customers who prefer dealing with suppliers that issue VAT invoices.

“By registering, SMEs not only benefit from input VAT but also attract more customers, as buyers prefer to deal with traders who issue VAT invoices,” he said.

The Deputy Minister added that businesses are allowed to register for VAT voluntarily, regardless of turnover, and that this option strengthens competitiveness and supports SME expansion.

Jayaweera further explained that the government’s decision to keep the VAT threshold unchanged at Rs. 60 million, instead of reducing it to Rs. 36 million, was taken after considering the economic impact of Cyclone Ditwah last year and the Middle East crisis, which drove up fuel costs and commodity prices.

He stressed that while the move protects smaller businesses from additional tax burdens, voluntary VAT registration remains a strategic pathway for SMEs to grow and integrate more effectively into the formal economy. (Newswire)

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Opposition Leader Sajith Premadasa has welcomed the government’s decision not to proceed with the proposed reduction of the Value Added Tax (VAT) and Social Security Contribution Levy (SSCL) turnover threshold, calling it “a win for Sri Lanka’s SMEs.”

In a statement posted on ‘X’, Premadasa expressed gratitude to Opposition members who campaigned against the move, stressing that while broadening the tax base is necessary, it should not come “on the backs of our smallest businesses.”

The proposal, announced earlier this year, sought to lower the annual turnover threshold for VAT and SSCL from Rs. 60 million to Rs. 36 million, effective July 1. 

However, Deputy Minister of Economic Development Nishantha Jayaweera told Parliament yesterday (23) that the plan will not be implemented.

He said the decision followed clearance from the Cabinet of Ministers, the Attorney General, and recommendations from the Parliamentary Consultative Committee. (Newswire)

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Deputy Minister of Economic Development, Nishantha Jayaweera, has announced that the budget proposal to reduce the annual turnover threshold for Value Added Tax (VAT) and the Social Security Contribution Levy (SSCL) from Rs.60 million to Rs.36 million will not be implemented.

The proposal to reduce the annual turnover threshold from Rs.60 million to Rs.36 million was to come into effect from July 1.

“We are removing this proposal after receiving the relevant clearance from the Cabinet of Ministers and the Attorney General, as well as the recommendations of the Parliamentary Consultative Committee,” he said, addressing Parliament today (23).

Deputy Minister of Economic Development, Nishantha Jayaweera, further questioned why the Opposition was opposing the move when they themselves called for such taxes. (Newswire)

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Committee on Public Finance (COPF) Chairman MP Harsha de Silva today called on the government to clarify tax neutrality between resident and non‑resident digital service providers before the debate on the Value Added Tax (Amendment) Bill.

“We would like the government to make a clarification, because the COPF committee did not get a clarification,” he told Parliament, stressing that the issue must be addressed before proceeding with the second reading of the Bill.

He pointed out that the concern stems from differing tax treatment: local digital service providers are taxed on the full value of transactions, while non‑resident providers are taxed only on the commission they earn. 

MP Harsha noted that while this may be defensible from an accounting point of view, it creates an asymmetry from an economic and national development perspective.

He recalled that under the previous government, COPF had argued taxation should be based on the jurisdiction of consumption rather than production. 

While this principle has now been adopted, he warned that domestic providers risk being disadvantaged unless neutrality is ensured.

The second reading of the VAT Amendment Bill, which seeks to widen the tax net and strengthen compliance, is scheduled for debate in Parliament today (23). (Newswire)

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Opposition Leader Sajith Premadasa has sharply criticized the government’s proposed Value Added Tax (VAT) amendments, warning that the sweeping changes set to take effect from July 1 will suffocate businesses rather than spur growth.

“Sri Lanka widens the VAT net, raises rates, and tightens enforcement all at once. SMEs dragged in. Financial services taxed higher. Digital economy captured. And compliance burden increased. This isn’t reform. It’s extraction. You cannot tax an economy into growth. If businesses can’t breathe, they won’t survive or thrive. And if they don’t survive what exactly will be left to tax?” he said in a statement on ‘X’.

The VAT Amendment Bill, released on April 29, proposes reducing the registration threshold from Rs. 60 million to Rs. 36 million annually, pulling more small and medium enterprises into the tax net. It also introduces VAT on digital services provided by non-resident companies to Sri Lankan consumers, and raises VAT on financial services from 18% to 20.5%.

Stricter enforcement measures are included, with fines for tax offences increased to Rs. 1 million and possible imprisonment of up to six months. VAT‑registered businesses will also be required to adopt Inland Revenue Department‑approved secured point‑of‑sale systems for real‑time transaction reporting.

The Bill further provides for public disclosure of registered taxpayers, revised input tax rules, and exemptions for strategic businesses under the Colombo Port City framework. (Newswire)

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The Department of Inland Revenue has announced a further postponement of the effective date for imposing Value Added Tax (VAT) on digital services supplied through electronic platforms by non-resident service providers.

According to WEB Notice No. PN/VAT/2025-03, originally issued on October 1, 2025, the tax was scheduled to take effect earlier this year. 

However, issuing a notice, the department announced that implementation has now been deferred until July 1, 2026, subject to formal amendment of the VAT Act.

The Finance Ministry had earlier announced that the effective date, initially set for October 2025, was postponed to April 2026.

At the time, the government said the delay was due to requests from stakeholders in the digital services sector, noting that it had engaged with them and they had asked for more time to prepare for compliance. (Newswire)

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The new format and specifications for tax invoices to be issued by all individuals registered for Value Added Tax (VAT), which were scheduled to commence today (April 1), have been postponed.

The Commissioner General of Inland Revenue announced that the implementation date has been extended by three months, with the new system now set to take effect from July 1, 2026.

The change follows an amendment to Extraordinary Gazette Notification No. 2463/05, dated November 17, 2025, which had earlier prescribed April 1 as the effective date.

The revised regulations will apply to all persons registered for VAT. (Newswire)

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The department said manual submissions will no longer be accepted after August 31, 2025. Any individual or business seeking VAT registration will be required to complete the process digitally.

Taxpayers have been advised to access the IRD’s official website or contact the call center via 1944 for guidance and assistance with the online service. (Newswire)

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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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The Department of Inland Revenue has filed a case against Arjun Aloysius and Anthony Randev Jinendra John, directors of W.M. Mendis & Company, for allegedly evading over Rs. 1.035 billion in Value Added Tax (VAT) owed to the Sri Lankan government.

The case was brought before Colombo Additional Magistrate Pavithra Sanjeewani Pathirana, who today issued summons requiring both defendants to appear in court on October 13, 2025. 

The charges relate to unpaid VAT for the financial years 2019 and 2020, which authorities claim were deliberately withheld.

Representing the Inland Revenue Commissioner, Attorney-at-Law Dinesh Perera requested the court to issue the summons, citing the significant financial loss to the state. 

In a previous case, also filed by the Department of Inland Revenue, the same directors were convicted and sentenced to six months in prison for similar VAT violations. (Newswire)

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The Inland Revenue Department (IRD) has reopened registration for authorized retailers under the Tourist VAT Refund Scheme (TVRS), enabling eligible businesses to offer VAT refunds to foreign tourists.

Under Section 58A of the Value Added Tax Act, retailers registered for VAT and displaying eligible goods at their business premises can now apply for TVRS authorization.

Application forms are available on the IRD web portal. Submissions must be made to the Large Taxpayer Refund Unit in Colombo.

For further assistance, the IRD Call Centre can be contacted via 011 213 4192 or 011 213 5435. (Newswire)

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The Sri Lankan government has enacted the Value Added Tax (Amendment) Act, No. 04 of 2025, introducing significant tax exemptions aimed at reducing costs in energy production and promoting local agriculture.

Effective April 11, 2025, the Act exempts from VAT the supply or import of chemical naphtha by the Ceylon Petroleum Corporation (CPC) to the Ceylon Electricity Board (CEB) for electricity generation. This measure is intended to lower operational expenses in the energy sector and stabilize electricity tariffs.

Additionally, the Act provides VAT exemptions for liquid milk and yoghurt products that contain at least 50% locally produced fresh milk. This initiative supports domestic dairy farmers and encourages the consumption of locally sourced dairy products.

The legislation was passed in Parliament without a division and received the Speaker’s endorsement on April 11, 2025, thereby becoming law. (Newswire)

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Three Directors of a private company in Kandana that sold and distributed cigarettes have been sentenced to 06 months with simple work, for the failure to pay Value Added Tax (VAT) amounting to Rs. 233 million.

Colombo Additional Magistrate Bandara Illangasinghe issued the order yesterday (17 Mar) after taking up for consideration a case filed by the Income Tax Commissioner against four directors of the company. 

The group had been notified in May 2024 to settle the unpaid VAT amounts for 2016, 2017, and 2019.

Their lawyer had informed the court that they were not bound to settle the amount as they no longer worked as the directors of the said company. 

However, the lawyer representing the Income Tax Commissioner, told the court that the accused had failed to pay VAT while serving as Directors of the Company and had only left after a case had been filed against them.

Taking into consideration the facts, the Colombo Additional Magistrate announced that the accused must pay the pending VAT and failure to do so would see them sentenced to 06 months with simple work.

As the accused had failed to settle the VAT payment, prison officials escorted the three accused to prison. (Newswire)

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Director of W.M. Mendis Distilleries, Arjun Aloysius, who was sentenced to jail for defaulting on a payment of Rs. 3.5 billion in Value Added Tax (VAT), has been released two months prior to the completion of his prison term. 

Prison Spokesman Gamini Dissanayake told Newswire that Arjun Aloysius, along with two others convicted in the case, had been released based on good behaviour. 

Gamini Dissanayake said the prison conducts a programme for good behaviour and workplace participation, which enables convicts to reduce 1/3rd of their prison sentence.

As such, Arjun Aloysius and the two other convicts had earned their respective jail term reductions due to good behaviour and were released on Saturday (Feb 23), two months prior to the completion of their prison term, he said. 

In October of last year, the trio were sentenced to a six-month jail term by the Colombo Chief Magistrate’s Court for failing to pay the VAT amounting to Rs. 3.5 billion. (Newswire)

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Cabinet approval has been granted for the amendments to the Value Added Tax and Inland Revenue Acts to be published in the government gazette notification and thereafter be submitted to Parliament for approval. 

According to the government, directives were given to the Legal Draftsman, based on the decisions of the Cabinet meetings held in December 2024 and February 2025 to draft bills, to amend the Value Added Tax Act No. 14 of 2002 and the Inland Revenue Act No. 24 of 2017, respectively. 

The Value Added Tax Act No. 14 of 2002 and Inland Revenue Act No. 24 of 2017 were drafted with relevant amendments, to which the Attorney General’s clearance had also been received.

Therefore, the Cabinet of Ministers approved the proposal by the President,  in his capacity as the Minister of Finance, to publish those draft bills in the government gazette notification and submit it to the Parliament for approval. (Newswire)

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Deputy Minister of Finance Anil Jayantha Fernando says the government could have removed taxes if not for the agreement with the International Monetary Fund (IMF). 

Speaking during a televised interview with local media, the Deputy Minister clarified why the government could not remove taxes in its inaugural budget, as promised during the Presidential Election. 

“The budget is not the only measure that could be taken to fulfil the expectations of the people. And the inaugural budget is also not the only tool to address this. This budget is to place the foundation for the path to fulfil the needs of the public,” he said. 

Deputy Minister Anil Jayantha Fernando further emphasized that the government’s aim was to remove Value Added Tax (VAT) from unnecessary items. 

“Tax could have been removed in the inaugural budget if the IMF agreement was not in place. We were only able to decide on the course of action with the IMF after assuming power,” he explained.

Deputy Minister of Finance Anil Jayantha Fernando acknowledged that the government intended to remove taxes in its inaugural budget, but was unable to do so. (Newswire)

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