Updated weekly by GDP Consultants. Last updated: 6 July 2026 (corrected).
Stay on top of Sri Lanka’s tax changes without digging through IRD circulars yourself. Each week we summarise the latest gazette notices, IRD circulars, and deadlines that actually affect individuals and businesses.
This Week’s Key Updates
Correction: VAT Registration Threshold Reduction Was Dropped, Not Implemented
An earlier version of this page said the annual VAT/SSCL registration threshold had dropped to Rs. 36 million from 1 July 2026. That’s now confirmed incorrect. Parliament reversed this on 23 June, and the Value Added Tax (Amendment) Act No. 14 of 2026 — certified 30 June, gazetted 3 July — retains the threshold at Rs. 60 million per annum. Businesses below Rs. 60 million are not required to register, though voluntary registration remains available. Some local awareness sessions and earlier reports (including our own) referenced the originally proposed Rs. 36 million figure before the reversal — if you registered or budgeted based on that number, you can stand down.
VAT on Financial Services Rises to 20.5%
This part was not reversed. Effective 1 July 2026, VAT on banks and financial institutions has increased to a composite 20.5% rate, consolidating the previous 18% VAT and the 2.5% Social Security Contribution Levy into one charge. It applies specifically to financial services — the general 18% VAT rate on other goods and services is unchanged.
VAT on Nonresident Digital Services Has Gone Live — Threshold Also Higher Than First Proposed
After three postponements, VAT on cross-border digital services is now in effect. Under the final Act, non-resident digital service providers (streaming, ad platforms, app stores, cloud/SaaS, ride-hailing and accommodation platforms, etc.) must register for VAT if their supplies to Sri Lankan customers exceed Rs. 60 million in 12 months or Rs. 15 million in a quarter — higher than the Rs. 36 million / Rs. 9 million figures floated earlier in the year. B2B supplies to VAT-registered Sri Lankan businesses remain exempt.
New Tax Invoice Format Fully Mandatory
The revised VAT tax invoice format (Gazette No. 2481/22) is now fully binding for all VAT-registered persons from 1 July 2026, after repeated postponements. Check that your invoicing or ERP system produces the correct serial number structure (YYMMM_QQQQ_XXXXX), TIN details, and supply date fields — non-compliant invoices risk rejected input tax claims for your customers.
“Tax Power 2026” (Badu Shakthi) Compliance Campaign Launches This Month
The Presidential Secretariat, together with the Inland Revenue Department, Customs, and Excise, is launching a national campaign this month to encourage voluntary tax compliance and explain the year’s changes to the public. A dedicated Youth Day is planned, with the campaign’s mass-media and social-media phase running 11–12 July.
Upcoming Deadlines to Watch
- 15 July 2026 — First installment of Income Tax and Statement of Estimated Tax (SET) for Y/A 2026/2027 (corporate: 2nd, individual: 5th, partnership: 9th), plus APIT and AIT/WHT payments for June.
- 20 July 2026 — SSCL payment, SSCL quarterly return, and VAT payment for June.
- 31 July 2026 — Monthly VAT return for July.
- 2 December 2026 — Final date to pay outstanding principal tax in full to qualify for the interest waiver on late-payment interest, surcharge tax, and debt repayment levy (up to Y/A 2024/2025).
- 30 November 2026 — Annual income tax return filing deadline for Y/A 2025/2026.
Why This Matters
This week’s headline story is really a reversal: the government pulled back from the VAT/SSCL threshold cut it had budgeted for, even as it went ahead with the financial-services rate rise, the digital services net, and the new invoice format. If you’d already started registration paperwork on the assumption the threshold was dropping to Rs. 36 million, you don’t need to — but it’s worth double-checking your own compliance calendar against the numbers above rather than relying on earlier reporting (including our own prior version of this page). This page exists so you don’t have to track the IRD and gazette sites yourself — GDP Consultants does it for you, every week.
Need help applying any of this to your business? Book a consultation with our team.