Sri Lanka VAT Guide for 2026: Rates, Registration & Filing
Sri Lanka's VAT rate is 18% following the 2024 increase. Learn the registration threshold, the rules for foreign digital-service suppliers, and monthly filing requirements.
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Key Takeaways
Sri Lanka's VAT standard rate is 18%, raised from 15% on January 1, 2024, with exports zero-rated. A business registers once taxable supplies exceed LKR 60 million in any 12 months (LKR 15 million per quarter); from July 1, 2026, non-resident electronic-platform suppliers must register once their supplies to Sri Lankan consumers exceed the same threshold. Essential foods, healthcare, education, and certain financial services are exempt; SaaS and digital services (streaming, apps, e-learning) are taxable at 18%, with B2B cross-border supplies using a reverse charge.
Taxability Snapshot
SaaS
Taxable
Digital Goods
Taxable
Sales Tax Rates
Sri Lanka's Value-Added Tax (VAT) has a standard rate of 18%, raised from 15% on 1 January 2024, under the VAT Act No. 14 of 2002 as amended. Exports are zero-rated, and specified essential goods and services are exempt. The Inland Revenue Department (IRD) administers it [1][2].
Rate | Applies to |
|---|---|
Standard 18% | Most goods and services |
Zero 0% | Exports and specified zero-rated supplies |
Exempt | Specified essential foods, healthcare, education, some financial services |
For more detail, see our APAC VAT guides.
Registration & nexus threshold
Sri Lanka uses a VAT registration threshold, not US-style economic nexus. A business must register once taxable supplies exceed LKR 60 million in any 12 months or LKR 15 million in any quarter [1]. From 1 July 2026, a non-resident person supplying services through an electronic platform to consumers in Sri Lanka must register once such supplies exceed the same LKR 60 million (12 months) or LKR 15 million (3 months) thresholds, and charge 18% [2]. Registration steps are in the How to Register section.
Filing frequency & deadlines
Domestic VAT is generally filed monthly, with payment due around the 20th of the following month. The non-resident digital-services regime operates on a quarterly period, with remittance to the Commissioner-General of Inland Revenue by the 20th day after each quarter-end [1][2].
Exemptions
Specified essential foods, healthcare, education, and certain financial services are exempt, and exports are zero-rated. SaaS and digital services are taxable at 18%, including services supplied by non-resident providers such as streaming, apps, and e-learning; B2B cross-border supplies use a reverse charge [1][2].
Penalties
Late payment of VAT triggers a penalty of about 10% of the tax due, with further penalties and interest accruing on continued default. Failure to register or file carries additional penalties under the Inland Revenue and VAT Acts [1].
Sources
[1] Inland Revenue Department — Value Added Tax (18% rate, registration thresholds)
[3] Inland Revenue Department — Schedule of goods and services exempt from VAT
Verified July 2026 against Inland Revenue Department (Sri Lanka) guidance.
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