Sri Lanka zero-rated VAT status for foreign software exports: IRD proof requirements?
3 Answers from travellers
Under current Value Added Tax Act provisions, businesses exceeding the statutory turnover threshold (typically Rs. 60 million per annum or Rs. 15 million per quarter) are legally required to obtain VAT registration from the Inland Revenue Department. However, software development and IT services exported to clients located outside Sri Lanka and paid for in foreign currency through approved banking channels are classified as zero-rated supplies. While registration is mandatory once turnover exceeds the threshold, the tax payable on genuine export services is 0%, enabling input tax recovery.
Retain all SWIFT MT103 incoming foreign remittance slips; without bank remittance proof, auditors will classify income as domestic taxable supplies.
Engage a registered chartered accounting firm in Colombo to file monthly electronic returns via the RAMIS portal to avoid administrative fines.
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