# sri-lanka-vat

## Section 1 — Quick reference

**Quick reference table**

| Field | Value |
| --- | --- |
| Country | Sri Lanka (Democratic Socialist Republic of Sri Lanka) |
| Standard rate | 18% (effective 1 January 2024) |
| Zero rate | 0% (exports, specified essential goods) |
| Exempt | Financial services, healthcare, education, residential rent, unprocessed agriculture |
| Return form | Monthly VAT return (via IRD e-filing) |
| Filing portal | https://www.ird.gov.lk (IRD e-Services) |
| Authority | Inland Revenue Department (IRD) |
| Currency | LKR (Sri Lankan Rupee) |
| Filing frequency | Monthly |
| Deadline | Last business day of the month following the tax period |
| Registration threshold | LKR 80 million per annum (or LKR 20 million per quarter) |
| Companion skill | vat-workflow-base v0.1 or later — MUST be loaded |
| Validated by | Pending local practitioner validation |

**Conservative defaults**

| Ambiguity | Default |
| --- | --- |
| Unknown rate on a sale | 18% |
| Unknown VAT status of a purchase | Not deductible |
| Unknown counterparty location | Domestic Sri Lanka |
| Unknown business-use proportion | 0% recovery |

## Section 2 — Required inputs and refusal catalogue

### Required inputs

**Minimum viable** — bank statement for the month. Acceptable from: BOC (Bank of Ceylon), People's Bank, Commercial Bank, HNB (Hatton National Bank), Sampath Bank, Seylan Bank, DFCC, NDB, Nations Trust, or any other.

### Sri Lanka-specific refusal catalogue

- **R-LK-1 — BOI enterprise** — Trigger: client under Board of Investment agreement with tax holidays. Message: "BOI enterprises have bespoke tax exemptions. Please escalate."  _(R-LK-1)_
- **R-LK-2 — Social Security Contribution Levy (SSCL) interaction** — Trigger: SSCL applies alongside VAT. Message: "SSCL is a separate levy that may affect pricing and compliance. Verify current status (SSCL was suspended/reintroduced periodically)."  _(R-LK-2)_
- **R-LK-3 — Simplified VAT regime** — Trigger: client on simplified regime. Message: "Simplified VAT has different filing requirements. Please escalate."  _(R-LK-3)_

## Section 3 — Supplier pattern library

### 3.1 Sri Lankan banks (fees exempt — exclude)

**Sri Lankan banks pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| BOC, BANK OF CEYLON | EXCLUDE for bank charges | Exempt |
| PEOPLES BANK, PEOPLE'S BANK | EXCLUDE for bank charges | Same |
| COMMERCIAL BANK, COMBANK | EXCLUDE for bank charges | Same |
| HNB, HATTON NATIONAL | EXCLUDE for bank charges | Same |
| SAMPATH, SEYLAN, NDB, DFCC | EXCLUDE for bank charges | Same |
| NATIONS TRUST | EXCLUDE for bank charges | Same |
| INTEREST, LOAN, REPAYMENT | EXCLUDE | Out of scope |

### 3.2 Government (exclude)

**Government pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| IRD, INLAND REVENUE | EXCLUDE | Tax payment |
| CUSTOMS, SRI LANKA CUSTOMS | EXCLUDE | Duty |
| EPF, ETF | EXCLUDE | Employee provident/trust fund |
| COMPANY REGISTRAR | EXCLUDE | Registration fee |

### 3.3 Utilities

**Utilities pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| CEB, CEYLON ELECTRICITY | Domestic 18% | Electricity |
| LECO | Domestic 18% | Electricity (Colombo) |
| NWS&DB, NATIONAL WATER | Domestic 18% | Water |
| SLT, SRI LANKA TELECOM, DIALOG, MOBITEL | Domestic 18% | Telecoms |
| HUTCH, AIRTEL LK | Domestic 18% | Same |

### 3.4 Digital payments

**Digital payments pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| FRIMI, GENIE, IPAY | EXCLUDE for fees | Financial service |

### 3.5 SaaS and international services

**SaaS pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| GOOGLE, MICROSOFT, META, AWS | Self-assess 18% | Non-resident |
| ZOOM, SLACK, CANVA | Self-assess 18% | Same |

### 3.6 Payroll and exclusions

**Payroll pattern table**

| Pattern | Treatment | Notes |
| --- | --- | --- |
| SALARY, WAGES | EXCLUDE | Outside VAT scope |
| OWN TRANSFER, INTERNAL | EXCLUDE | Internal |
| DIVIDEND | EXCLUDE | Out of scope |
| CASH WITHDRAWAL | TIER 2 — ask | Default exclude |

## Section 4 — Worked examples

### Example 1 — Standard domestic sale at 18%

**Input line:** `05.04.2026 ; COLOMBO TRADING PVT ; CREDIT ; Invoice LK-041 ; LKR 1,180,000`

**Reasoning:** Domestic. 18%. Net = LKR 1,000,000, VAT = LKR 180,000.

**Example 1 result table**

| Date | Counterparty | Gross | Net | VAT | Rate | Field | Default? | Excluded? |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 05.04.2026 | COLOMBO TRADING | +1,180,000 | +1,000,000 | 180,000 | 18% | Output | N | — |

### Example 2 — Export, zero-rated

**Input line:** `15.04.2026 ; UK BUYER LTD ; CREDIT ; Tea export ; LKR 5,000,000`

**Example 2 result table**

| Date | Counterparty | Gross | Net | VAT | Rate | Field | Default? | Excluded? |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 15.04.2026 | UK BUYER LTD | +5,000,000 | +5,000,000 | 0 | 0% | Zero-rated | N | — |

### Example 3 — Non-resident digital service

**Input line:** `18.04.2026 ; AWS ; DEBIT ; Cloud hosting ; LKR -60,000`

**Example 3 result table**

| Date | Counterparty | Gross | Net | VAT | Rate | Field | Default? | Excluded? |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 18.04.2026 | AWS | -60,000 | -60,000 | 10,800 | 18% | Output + Input | N | — |

### Example 4 — Bank charges

**Input line:** `30.04.2026 ; BOC ; DEBIT ; Monthly charge ; LKR -1,000`

**Example 4 result table**

| Date | Counterparty | Gross | Net | VAT | Rate | Field | Default? | Excluded? |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 30.04.2026 | BOC | -1,000 | — | — | — | — | N | "Exempt" |

## Section 5 — Tier 1 classification rules (compressed)

### 5.1 Standard rate 18% — Default for all taxable supplies (from 1 Jan 2024; previously 15%).

- **Standard rate** — 18% (Default for all taxable supplies (from 1 Jan 2024; previously 15%))

### 5.2 Zero rate — Exports, specified essential goods.

- **Zero rate** — 0% (Exports, specified essential goods)

### 5.3 Exempt — Financial services, healthcare, education, residential rent, unprocessed agriculture.

- **Exempt supplies** — Financial services, healthcare, education, residential rent, unprocessed agriculture

### 5.4 Input tax credit — Valid tax invoice with TIN required. Business purpose. Apportionment if mixed.

- **Input tax credit** — Valid tax invoice with TIN required. Business purpose. Apportionment if mixed.

### 5.5 Blocked input — Personal consumption, entertainment, passenger vehicles.

- **Blocked input** — Personal consumption, entertainment, passenger vehicles

### 5.6 Imports — VAT at 18% on CIF plus duty.

- **Imports** — VAT at 18% on CIF plus duty

### 5.7 Reverse charge — Non-resident services: self-assess 18%.

- **Reverse charge** — Non-resident services: self-assess 18%

### 5.8 Registration — Mandatory if turnover exceeds LKR 80M/year or LKR 20M/quarter.

- **Registration threshold** — LKR 80M/year or LKR 20M/quarter (Mandatory registration)

## Section 6 — Tier 2 catalogue (compressed)

### 6.1 Vehicle costs — Default: 0%.

- **Vehicle costs** — Default: 0%

### 6.2 Entertainment — Default: block.

- **Entertainment** — Default: block

### 6.3 SaaS entities — Default: self-assess 18%.

- **SaaS entities** — Default: self-assess 18%

### 6.4 BOI enterprise status — Default: flag. Question: "BOI agreement in force?"

- **BOI enterprise status** — Default: flag. Question: "BOI agreement in force?"

### 6.5 SSCL interaction — Default: flag. Question: "Is SSCL currently in force?"

- **SSCL interaction** — Default: flag. Question: "Is SSCL currently in force?"

### 6.6 Cash withdrawals — Default: exclude.

- **Cash withdrawals** — Default: exclude

## Section 7 — Excel working paper template

Per vat-workflow-base Section 3, with Sri Lanka fields: Output 18%, Zero-rated, Exempt, Input domestic, Input imports, Net VAT.

## Section 8 — Bank statement reading guide

BOC, People's Bank, Commercial Bank exports CSV/PDF. LKR primary. Sinhala/Tamil descriptions possible. Internal transfers: exclude. Convert foreign currency at CBSL rate.

## Section 9 — Onboarding fallback

### 9.1 TIN — "What is your IRD TIN?"

- **TIN** — "What is your IRD TIN?"

### 9.2 Filing period — Monthly. "Which month?"

- **Filing period** — Monthly. "Which month?"

### 9.3 Industry — "What does the business do?"

- **Industry** — "What does the business do?"

### 9.4 Exports — "Do you export?"

- **Exports** — "Do you export?"

### 9.5 BOI status — "Are you under a BOI agreement?"

- **BOI status** — "Are you under a BOI agreement?"

### 9.6 Credit brought forward — Always ask.

- **Credit brought forward** — Always ask

## Section 10 — Reference material

### Sources

1. Sri Lanka Value Added Tax Act No. 14 of 2002 (as amended). 2. Inland Revenue (Amendment) Act. 3. IRD e-Services portal.

### Known gaps

1. BOI enterprises refused. 2. SSCL status changes frequently. 3. Rate changed from 15% to 18% in Jan 2024 — verify for transitional periods.

### Change log

- v2.1 (June 2026): Added jurisdiction/verification frontmatter; removed duplicate disclaimer; standard rate 18% re-confirmed against IRD YA 2025/26 tax chart.
- v2.0 (April 2026): Full rewrite to Malta v2.0 ten-section structure.

## Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.

The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.

## Talk to a verified accountant

This skill is a tool, not an engagement. Every taxpayer's situation is
different, and the rules in the skill may not match your specific facts.

To speak with one of the licensed accountants who verifies skills for your
jurisdiction — **no liability on either side until you and the accountant sign
a formal engagement letter** — book a free 30-minute call:

**→ [Book a call](https://calendly.com/openaccountants-info/30min)**

We'll route you to the named verifier covering your country or state. You can
also see the full list of verified accountants at
[openaccountants.com/network](https://openaccountants.com/network).