VAT on Digital Services Sri Lanka from July 2026
From July 1, 2026, Sri Lanka charges 18% VAT on digital services from non-resident providers — affecting Netflix, Spotify, AWS, Google Workspace, Microsoft 365, Adobe Creative Cloud, Zoom, and thousands of online platforms.
Use our free Digital Services VAT Calculator to see exactly how much extra you will pay from July 2026.
Examples of New Prices After 18% VAT
| Service | Current | VAT 18% | New Price |
|---|---|---|---|
| Netflix Standard | LKR 1,490 | LKR 268 | LKR 1,758/month |
| Spotify Premium | LKR 699 | LKR 126 | LKR 825/month |
| Google Workspace (per user) | LKR 1,800 | LKR 324 | LKR 2,124/month |
| Microsoft 365 Business | LKR 2,200 | LKR 396 | LKR 2,596/month |
| Adobe Creative Cloud | LKR 5,500 | LKR 990 | LKR 6,490/month |
VAT Threshold Change July 2026
The VAT registration threshold drops from LKR 60 million to LKR 36 million per year from July 1, 2026. Businesses with turnover between LKR 36–60 million must register for VAT before this date.
B2C vs B2B
- Consumers (B2C): Provider charges 18% VAT — prices increase.
- VAT-registered businesses (B2B): Reverse charge applies — self-account and claim input tax, cost-neutral.
FAQs
Will Netflix add VAT to my Sri Lanka subscription?
Yes. Non-resident providers exceeding the registration threshold must charge 18% VAT to Sri Lankan consumers from July 1, 2026.
Can businesses claim back the digital services VAT?
Yes. VAT-registered Sri Lankan businesses apply the reverse charge mechanism and claim input tax, resulting in a net-zero cost impact.
📊 Calculate your digital VAT impact | 📅 Book a VAT consultation
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