March 10, 2025

Sri Lanka’s Digital Transformation 2025 – Businesses

As Sri Lanka embraces a digital-first economic agenda, 2025 is shaping up to be a pivotal year for businesses. With the government prioritizing paperless processes, e-governance, and digital tax administration, every sector—from manufacturing to finance—is expected to modernize, compete, and comply through technology.

Here’s how Sri Lanka’s Digital Transformation 2025 is impacting businesses across the island:

Key Pillars of the Digital Transformation Agenda

1. End-to-End E-Governance

  • The Inland Revenue Department (IRD), Customs, and BOI now operate digitized submission portals.
  • E-filing of taxes, e-permits, and digital payment gateways are mandatory for most companies.

    Less paperwork. Faster processing. Greater transparency.

2. Compulsory E-Invoicing & Digital Tax Filing

  • E-invoicing is being rolled out for VAT-registered businesses to ensure real-time transaction tracking.
  • All companies must file tax returns and reports online, reducing manual errors and increasing auditability.

3. Digital VAT for Online Services

  • Businesses buying or selling digital goods or services—including ads, SaaS, or cloud solutions—must account for 18% VAT digitally.
  • This includes non-resident service providers, who must now register for Sri Lanka VAT if serving local customers

How Businesses Are Affected

SME Sector

  • Government grants and digital vouchers are available to encourage SMEs to digitize accounting, inventory, and payment systems.
  • Tools like cloud accounting software and ERP platforms are now tax deductible.

Exporters

  • Export-related documentation must now be uploaded digitally for faster VAT refunds under the Risk-Based Refund System.

Tech and Startups

  • Easier company registration, IP filing, and access to tech parks through the BOI and ICTA portals.
  • Government-backed accelerators and sandbox regulations for AI, fintech, and blockchain startups.

Benefits for the Business Community

📉 Reduced operational costs through automation

⚖️ Better tax compliance and audit trail

🌍 Increased global competitiveness

🕒 Faster business approvals and financial transactions

What You Should Do Now

  • Adopt cloud-based accounting and ERP systems to meet compliance needs.
  • Train staff on digital tools, e-filing systems, and cybersecurity best practices.
  • Engage consultants or IT firms to help modernize your business operations efficiently.