8. Insertion of new Chapter IIIC in the principal enactment

The following Chapter is hereby inserted immediately after Chapter IIIB of the principal enactment and shall have effect as Chapter IIIC of the principal enactment: -

“CHAPTER IIIC

REGISTRATION AND PAYMENT OF

TAX ON DIGITAL SERVICES

25L. (1)

Notwithstanding anything to the contrary in section 10, a non-resident person who supplies services through an electronic platform to a person in

Sri Lanka (hereinafter referred to as the “digital services”) shall be required to be registered under this Act, if –

on or after July 1, 2026, the total value of the supply of such services, within the twelve months period then ending has exceeded sixty million rupees or an equivalent to that in any other currency; or

for any quarter commencing on or after July 1, 2026, the total value of the supply of such services, for a quarter exceeds or is likely to exceed fifteen million rupees or its equivalent in any other currency.

Every person who is required to be registered under subsection (1), shall make an application for registration electronically in the form specified by the Commissioner-General not later than three months, from the date on which such person is required to be registered or from the date on which the Commissioner-General has specified such form, whichever comes later.

Upon receipt of the application under subsection (2), the Commissioner-General shall register a non-resident person who complies with the requirements specified in subsection (1) (hereinafter referred to as the “registered non-resident digital service provider”) and issue a Certificate of Registration.

The Certificate of Registration -

shall include the name and address, country of residence, the effective date of registration and the Value

may be issued either electronically or in writing.

Where two or more of the following conditions are satisfied, based on information available to, or obtained by, the non-resident digital service provider in the course of supplying such services, a recipient of digital services shall be deemed to be a person in

the billing, residential or business address of the recipient is in

the payment for such digital services is made through a bank or financial institution in Sri Lanka;

the payment instrument used for the transaction is issued in Sri Lanka; or

the internet protocol address of the device used by the recipient is located in Sri Lanka.

The Commissioner-General shall cancel the registration -

where it is found that the registered non-resident person is not eligible to be registered under section 25L;

where the supplying of services has ceased for more than six months; or

where the total value of the supply of digital services does not exceeded the value set out in section 25L for two consecutive taxable periods.

Where the registered non-resident digital service provider has ceased to supply digital services or the total value of the supply of digital services is not exceeded the value set out in section 25L for two consecutive taxable periods and such service provider makes a request to the Commissioner-General to cancel the registration within thirty days from the date of such cessation or from the date of expiration of such consecutive taxable periods, as the case may be, and if the Commissioner-General is satisfied on the request made in that behalf, he may cancel the registration.

Where a registration is cancelled under subsection (1), the Commissioner-General shall notify the digital service provider such cancellation with the effective date and the reasons for such cancellation.

Notwithstanding the provisions of section 2 and this Chapter, the tax imposed under paragraph (c) of subsection (1) of section 2, shall not be charged on or collected for the supply of services made by a non-resident person through an electronic platform, where the recipient of such services is a registered person under this Act:

such tax if paid by a registered person to the registered non-resident digital service provider in respect of the supply of digital services shall be deemed to be input tax, and such registered person shall be entitled to deduct such input tax from the output tax, to the extent allowable under section 22 of this Act;

for the purpose of claiming input tax, an invoice issued by a registered non-resident digital service provider to such registered person, which separately specifies the Value Added

Where a supply of services is excluded from the charge of tax under subsection (1), the non-resident person making such supply shall, furnish to the Commissioner-General a simplified statement containing particulars of supplies made to registered persons in the

The statement referred to in subsection (2) shall be limited to the following particulars only: -

the date of payment or the invoice date, as the case may be;

the taxpayer identification number of the recipient;

the name of the recipient;

the value of the supply;

invoice number; and

description of the service supplied.

Where any person fails to comply with the provisions of subsection (2), the

impose on such person a penalty of a sum not exceeding fifty thousand rupees, and give notice in writing or by electronic means to such person of the imposition of such penalty;

give notice in writing or by electronic means to such person to-

pay such penalty; and

comply with the provisions of subsection (2) within such period as may be specified in such notice.

The

The time and value of supply of digital services shall be determined in accordance with the provisions of sections 4

The

The tax payable in respect of any taxable period by a registered non-resident digital service provider shall be paid to the

by electronic remittance through the online system of the Department of

in Sri Lankan rupees or in such foreign currency as may be permitted by the

either directly by the non-resident digital service provider or through a representative appointed for that purpose.

The

Every registered non-resident digital service provider shall file a return for each taxable period as specified in section 21

All notices, documents or other information shall be served to the non-resident person by an electronic means.

Every registered non-resident digital service provider shall maintain accounts for the tax charged under this Act on an invoice basis.

Any variation arising from the conversion of foreign currencies into Sri Lanka rupees shall be disregarded for the purpose of submission of returns, and such variance shall