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

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