E-filing of VAT returns mandated from July 2025

The Inland Revenue Department (IRD) says that all Value Added Tax (VAT) returns must be filed electronically from July 01, 2025. 

Meanwhile, manual filed return submissions will only be allowed under exceptional circumstances approved by the Commissioner General, the IRD noted.

Earlier today (17), the IRD announced that locally produced liquid milk and yogurt are now exempted from VAT, following the enactment of the Value Added Tax (Amendment) Bill.

In addition to dairy products, VAT has also been removed on naphtha supplied by the Ceylon Petroleum Corporation (CPC) to the Ceylon Electricity Board (CEB) for electricity generation.

The amendment introduces new tax obligations for the digital economy. From October 1, VAT will be imposed on digital services provided by non-resident entities to consumers in Sri Lanka through electronic platforms. This move aligns with global trends in taxing cross-border digital services.

Further, the department announced that all individuals and entities engaged in the commercial import or export of goods are now required to register under the updated VAT framework.

The department clarified that the VAT exemption came into effect on April 11, the day the bill received parliamentary assent from Speaker Dr. Jagath Wickramaratne. The bill was passed in Parliament on April 9.

Additionally, the VAT exemption on the import of aircraft engines or aircraft spare parts, identified under specified Harmonized Commodity Description and Coding System Numbers for Custom purposes has been lifted with effect from April 11.