VAT Registration Checklist (Sri Lanka 2026)

Registration threshold review (2026)

The cut to LKR 9 million per quarter proposed in the April 2026 VAT (Amendment) Bill was abandoned. The VAT (Amendment) Act No. 14 of 2026, certified 30 June 2026, keeps the existing threshold (IRD notice SEC/PN/VAT/2026-03, 3 July 2026). Do not confuse it with the SSCL threshold, which fell to LKR 9 million per quarter from 1 July 2026.

VAT at 18% standard rate applies to all taxable supplies unless specifically zero-rated or exempt.

Mandatory registration triggers

• Taxable supplies exceed, or are likely to exceed, LKR 15 million in any quarter
• Taxable supplies exceed, or are likely to exceed, LKR 60 million in the 12 months then ending
• Commercial import of goods (no threshold)
• Export of goods (no threshold — zero-rated but registration required)
• Registration is backdated to the date the threshold was crossed, not the date of application

Registration process checklist

1. Confirm TIN and RAMIS access are active
2. Gather the turnover evidence for the threshold assessment
3. Apply through the IRD Tax Registration Unit to activate the VAT tax type
4. Receive the VAT registration certificate
5. Update all invoice templates to include VAT registration number and 18% VAT line
6. Notify customers of VAT-inclusive pricing changes
7. Set up the VAT accounting code structure in the ledger

Tax invoice requirements

• Supplier name, address, and VAT registration number
• Customer name and address
• Invoice date and sequential invoice number
• Description of goods or services supplied
• Quantity and unit price excluding VAT
• VAT amount charged (18% of taxable value)
• Total amount inclusive of VAT
• Invoices that do not meet these requirements cannot support input VAT claims

Monthly filing and payment cycle

Input VAT on purchases from registered suppliers can be claimed against output VAT. If input exceeds output, the excess is carried forward against future output VAT; only registrants eligible for the Risk-Based Refund Scheme (mainly exporters and suppliers to specified projects) receive refunds within 45 days.

Penalty exposure

• Late registration: backdated VAT from the date the threshold was crossed, plus the default penalty on it; failing to register is also an offence (fine up to LKR 1,000,000)
• Late payment: default penalty of 10% of the unpaid VAT, plus 2% a month, capped at 100% (no separate interest)
• Late filing: penalty of up to LKR 50,000 per return
• Incorrect invoices: input VAT claims may be disallowed for the recipient