Sri Lanka to Impose 18% VAT on PayPal, Stripe and Crypto Transactions
- CNL Reporter
- July 21, 2025
- Political
- PayPal
- 0 Comments
In a controversial move likely to impact online payments and digital commerce, Sri Lanka will impose an 18 percent Value Added Tax (VAT) on foreign financial platforms such as PayPal, Stripe, and cryptocurrency exchanges starting October 1. The tax, announced through a recent government gazette, is part of broader efforts to widen the country’s revenue base by targeting digital services used by local consumers.
The new regulation requires foreign FinTech platforms to collect and remit VAT on transactions made by Sri Lankan users. Analysts warn the measure could create further complications in the country’s already convoluted tax system, which includes a separate financial VAT unlike in most developed economies.
In countries like the UK and EU, services such as PayPal and Stripe are typically VAT-exempt or operate under systems like reverse charging that prevent double taxation. However, Sri Lanka’s lack of such mechanisms could result in unintended tax burdens, especially on smaller service transactions below the Rs. 60 million threshold.
Critics also point out the irony of imposing such taxes while the IMF has flagged smaller levies—like the 2.5 percent surcharge on credit card foreign payments—as violations of its currency policy guidelines.
