Digital services that will be taxed 18% VAT announced

7 July 2025 05:54 pm Views - {{hitsCtrl.values.hits}} 24 Bookmark

CHATURANGA PRADEEP SAMARAWICKRAMA Follow

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Colombo, July 7 (Daily Mirror) - A gazette notification has been issued announcing the list of digital services on which an 18 percent Value Added Tax (VAT) will be imposed with effect from October 01, 2025.

The new tax measure will be implemented under the Value Added Tax (Amendment) Act No. 04 of 2025.

According to the Commissioner General of the Inland Revenue Department (IRD) Ms. Rukdevi Perpetua Himali Fernando, guidelines outlining how the new VAT on digital services will be applied were officially published through Extraordinary Gazette No. 2443/30 on July 1, 2025.

The following areas will fall into this category of digital services treated as taxable supply, but not limited to:

Cloud Computing: Hosting, storage and computing power services,
Software as a service (SaaS): Web-based applications,
E-commerce Services: Online stores, payment gateways, and order fulfilment services,
Digital Marketing and advertising: SEO, social media marketing, PPC ads, and email marketing,
Cybersecurity Services: Threat detection, firewall protection, and data encryption,
IT Support & Managed Services: Remote tech support, IT consulting, and helpdesk solutions,
Streaming Services: Video, music, live content platforms,
Financial Technology (FinTech): online banking, payment processors (PayPal, Stripe, and crypto currency exchanges),
E-commerce Platforms,
Social Media Platforms,
On-Demand Service Platforms,
Content Sharing Platforms,
Cloud collaboration platforms,
Marketplace Platforms,
Gaming Platforms,
Blockchain & NFT Platforms: OpenSea, Binance, Ethereum-based Apps,
Subscription to membership websites,
Use of apps for hotel reservation, ticket booking.

The Gazette also said that even if a service is not listed above, it may still be subject to VAT if it falls within the scope described.

Comments - 24

Shehaan Monday, 07 July 2025 07:19 PM

Hurray ! This TAXATION for driving the nation into Stone age... I suppose that what they wanted from start ! This Taxes means we are an Anti - Digital Nation ! While all Ai Services providers are attempting to lower their subscription this nation voluntarily increasing it....Oh my god no where on earth other than in Repressive governments like North Korea such measures exists.

11 67

Gajendran Tuesday, 08 July 2025 08:23 AM

Make all VAT registered organisations CASHLESS. Some businesses hide part of the VAT collected in cash.

1 2

M Fernando Monday, 07 July 2025 07:20 PM

This is obviously the Best Way to increase Sri Lanka's IT sector, technology penetration and power future growth ! It would be better for all Sri Lankans to go back to using "gal-kooru" since it seems that this was the actual non-negotiable deal (in the guise of "saving the country") that was struck between RW and the IMF - to beat us all back to the Stone Age !

9 37

maha Monday, 07 July 2025 08:18 PM

good move to kill the Digital evolution in Sri Lanka

4 45

Yohan Monday, 07 July 2025 08:21 PM

Enough is enough. Npp Liars go home.

8 66

M Fernando Tuesday, 08 July 2025 05:04 AM

Your hero RW locked us into this non negotiable IMF "save the country" deal . Take any complaints you have, to him.

5 5

L de Silva Monday, 07 July 2025 08:30 PM

What away to promote the government's digital platform!! Kill the businesses or prevent potential investors and chase away the existing!! Who the hell comes up with these regressive policies!!??? Is this government INTENT in killing the private sector!!??? Is that it's ultimate objective!!? When investors have so many many options reasonable costs are what they expect and here's this government doing exactly the opposite!!! Was the sector even consulted before PENALISING them in this manner!!! Absolutely shocking decision making!!

2 47

Siripala Monday, 07 July 2025 09:24 PM

Well, they are a bi-product of a leading, or rather 'the' communism party. So yea, Private sector bye bye.

2 28

RanjithT Monday, 07 July 2025 08:59 PM

This will go against the so called digitalization undertaken by the comrades. All E-commerce services. on line stores, and even on line banking is subjected to 18% VAT. Does this mean if one were to transfer Rs. 100,000 to a different account for a purchase a 18% vat is payable? That will be Rs. 18,000 my foot. If this is what the gazette says who wants to do online banking and make any payment? Hopefully I have not understood the message clearly !

1 30

thushan Monday, 07 July 2025 09:12 PM

while siya brought starlink, AKD and he's cohorts are taking the country back to stone age..

2 38

Reza Dole Monday, 07 July 2025 09:42 PM

Why on earth tax, tax, tax . Please confiscate those who stole the country without taxing every tom, dick and harry. Don't the government ever think of giving some relief for there people who in our country. Give some relief for small and medium scale enterprises, individuals trying to earn a decent living, very soon there would be thieves everywhere.

2 30

Jifff Monday, 07 July 2025 10:32 PM

lol horu horu was a lie. Now pay your taxes.

1 3

Dilshan Perera Monday, 07 July 2025 09:50 PM

When andare AKD was begging for election last year, at his meetings he always pleaded that IT sector needed to improve performance and revenue from its small 1 billion USD to something similar to India's 100 billion USD! Is this the way these policy mf'ers plan to implement this??

0 3

A A Paranagama - VAT advisor Monday, 07 July 2025 10:12 PM

Most of these services are provided by beyond the horizon and the cost of it won't affect. Bad signs for those who pledged to take control for next 4 years.

0 0

Dr. Dee esquire Monday, 07 July 2025 10:17 PM

Nice! Congratulations people! Vote for NPP again. (If election is ever held)

1 1

Jehan Monday, 07 July 2025 10:35 PM

These are Needed tax reforms. This is the benefit of having a brand new government, otherwise people would take to streets.

1 0

Yatata Andala Naha Monday, 07 July 2025 11:32 PM

This is a very good move Hats off to president

5 1

Db Monday, 07 July 2025 11:46 PM

If other services and manufacturing sector pay taxes why digital services not .? Those digital services providers earn enormous wealth from others so should be taxes ,alternatively they can invest locally and get vat returns or reduction. Let’s make some deals

1 1

Hari Tuesday, 08 July 2025 12:33 AM

Hello Everyone,the gazette stipulates the 18% DST VAT IS FOR NON RESIDENTS.

1 1

Mahila Tuesday, 08 July 2025 02:34 AM

Without IMF deal, and INDIA, (Maleficent - Dirty word in Local Political parlance) - GAVE USD 4.6 B to meet the Humanitarian contingency to meet ESSENTIAL EXPENSES, DRY RATIONS, FUEL etc.!!?? What else was option RW had!!?? "Kalyana Mithrayo" – "China", (which believe had resources), Korea and Russia unable to mutter even in 'WHISPERS - the NEED be', to help this country out of the dire straits, RW and country were placed in!!?? STARVATION, essentials Deprivation FUEL, COOKING GAS critically needed for speedy RECOVERY!!?? ‘Each and Every one’, were waiting for Sri Lanka to GO DOWN on THEIR KNEES

0 0

Katukanna Tissa Tuesday, 08 July 2025 05:26 AM

This is one of the MOST absurd taxations I have ever heard of on planet Earth!! It is absolutely bananas to tax internet hotel bookings when we already pay over 23% in taxes on top of the hotel price. Very single Crypto currency is now 18% more expensive in SL ! No Srilankan would ever used local internet to purchase anything ! I'm waiting for JVP sympathizers to come and put their two cents in on this.

0 4

Rasi Tuesday, 08 July 2025 06:08 AM

A significant number of people evade taxes, including a substantial number of businesspeople, YouTubers, tuition masters and high-profile doctors. Currently, Income taxes are paid mainly by professionals and workers. Therefore, whichever government is in power needs to close these loopholes and start collecting taxes from every person with a substantial income. Sri Lanka's tax system has been broken for a long time, and as a result, a lot of indirect taxes have been collected, including GST and other forms such as high vehicle and luxury item taxes. If you expect any government to reduce indirect taxes, we need to ensure that all individuals pay their taxes on time and correctly.

0 3

Gona Tuesday, 08 July 2025 12:14 PM

Collect taxes from professionals and distribute among JVP nikamas. Is that what you mean.

0 1

Foot note Tuesday, 08 July 2025 11:34 AM

Trying to find the way out through examplary reciprocation with an economy bankrupt.

0 0

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