Imposition of 18% VAT on digital services aims to create level playing field: Deputy Minister

By Yohan Perera and Ajith Siriwardana

Economic Development Deputy Minister Dr. Anil Jayantha told Parliament yesterday that the imposition of an 18 percent Value Added Tax (VAT) on digital services is intended to create a level playing field among the service providers.

“Digital service providers such as PickMe already pay taxes, while international platforms like Uber were previously exempted. Under the new regulations, Uber will also be required to pay VAT,” Dr. Jayantha explained.

He noted that the tax on digital services was originally proposed in the 2025 budget. While it was initially scheduled to be implemented on April 1, the decision was made to defer the rollout to October, effectively giving the digital service providers a concessionary period.

Commenting on the government’s decision to introduce HS code-based taxation for parcels, Dr. Jayantha said the move is aimed at curbing the abuse of personal import concessions. 

“Some importers misuse these concessions to bring in large consignments under the guise of personal use,” he said.

Opposition MP Dr. Harsha de Silva raised concerns about the impact of the new tax policies on the small-scale e-commerce users. 

“Is the e-commerce crisis being solved by making personal importers pay HS code-based taxes?” he questioned. 

He also pointed out that a shipping handling fee of Rs.37,000 is being charged, which adversely affects the young entrepreneurs relying on the e-commerce platforms.