www.ft.lk ·
EY says proposed VAT changes may raise business costs increase tax disputes
Topic context
This topic has been covered 357712 times in the last 30 days across our monitored publishers.
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AI insight
AI-generatedSri Lanka-specific regulatory change affecting domestic businesses and foreign digital service providers. The VAT increase on financial services directly impacts banks and financial institutions' compliance costs and margins. Ambiguities in digital services definition create uncertainty for global tech firms operating in Sri Lanka. Lower threshold expands SME tax base, raising operational costs for small businesses.
Signals our AI researcher identified
Extracted by our AI model from this article and related public sources — not direct quotes from the publisher.
- Proposed VAT amendments in Sri Lanka published April 24, 2026.
- Foreign digital service providers must register for VAT if supplies exceed Rs. 36M annual or Rs. 9M quarterly.
- VAT rate on financial services to rise from 18% to 20.5% effective July 1, 2026.
- VAT registration threshold to be lowered, impacting more SMEs.
- EY warns of increased business costs and tax disputes due to ambiguities.
Higher VAT and compliance costs pressure bank profitability down 2-4% over 2-4 weeks.
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Sector impact at a glance
- EM_BANKINGmid
- EM_BANKINGshort
- EM_MARKETSmid
- EM_MARKETSshort
- GLOBAL_TECHshort
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