News
VAT on foreign digital services postponed again
View(s):By S. Rubatheesan
The government has further postponed the imposition of an 18 per cent Value Added Tax (VAT) on digital services supplied by non-resident service providers through electronic platforms until July 1, according to an Inland Revenue Department circular.
The imposition of VAT on such services has been further postponed until July 1, subject to formal amendment to the VAT Act, the IRD Commissioner General said.
Earlier, the government imposed an 18 per cent VAT on specified digital services from October 1 last year, under the Value Added Tax (Amendment) Act, as detailed in Extraordinary Gazette No. 2443/30. However, it was postponed till April 1 through another gazette notification.
The further postponement came in the wake of concerns raised by IT companies on the scope of services that would be included in the tax net. Most of these IT firms offer taxable digital services that include cloud computing, e-commerce, digital marketing, cybersecurity, IT support, streaming and fintech-related services.
If enacted, followed by pending parliamentary approval, Sri Lanka will join some 120 countries around the globe that levy tax on digital services.
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