AWS to charge 18% VAT on unregistered Sri Lankan customers, according to a notice issued by Amazon Web Services (AWS), although the company has yet to confirm the date from which the new tax will be applied to customer invoices.
AWS to charge 18% VAT on unregistered Sri Lankan customers as rollout date awaits confirmation
The announcement follows Sri Lanka’s introduction of Sri Lanka digital services VAT rules, which require non-resident providers of electronically supplied services to collect Value Added Tax (VAT) from customers who are not registered for VAT in the country.
In a notification sent to customers with a registered Sri Lankan address, Amazon Web Services said it will apply an 18 percent VAT to invoices covering AWS cloud services and AWS Marketplace purchases unless customers have submitted a valid Sri Lankan Tax Registration Number (TRN).
AWS has asked affected customers to update their account information before July 31, 2026, but clarified that the actual date on which the VAT will begin appearing on invoices has not yet been determined. The company said customers will receive a separate notification once the implementation date is confirmed.
Businesses that are registered for VAT in Sri Lanka have been advised to enter their TRN through the Tax Settings section of the AWS Billing Console and ensure that their business legal name and billing address are accurate. According to AWS, eligible VAT-registered businesses that complete this process will generally be exempt from the additional charge, subject to Sri Lanka’s applicable tax regulations.
Customers whose AWS accounts list a Sri Lankan billing address but who are no longer based in the country have also been instructed to update their Billing Address and Contact Address through the AWS Billing Console to ensure the correct tax treatment is applied.
The latest move comes after Sri Lanka enacted the Value Added Tax (Amendment) Act, No. 4 of 2025, which extended the country’s 18 percent VAT regime to electronically supplied services provided by non-resident businesses through digital platforms. The legislative reform was introduced as part of broader tax policy changes developed during reviews of Sri Lanka’s Extended Fund Facility programme with the International Monetary Fund.
Although the government originally intended to implement the new digital services VAT from October 1, 2025, the rollout has been delayed several times.
The Cabinet first postponed implementation to April 1, 2026, following requests from industry stakeholders seeking additional preparation time. Subsequently, on March 31, 2026, the Inland Revenue Department announced a further delay until July 1, 2026, although no specific reason was provided for the postponement.
Under the legislation, non-resident suppliers of digital services are required to register for VAT once they exceed Rs. 36 million in taxable supplies over a 12-month period or Rs. 9 million within a single calendar quarter. These thresholds were reduced from the levels initially proposed during the consultation process.
Amazon Web Services is among the first major global cloud providers to notify Sri Lankan customers about the practical implications of the new tax regime, but it is not alone.
Earlier this year, Microsoft informed its Sri Lankan customers and partners that invoices issued by its non-resident entities—including Azure and related cloud services—would also be subject to the 18 percent VAT unless customers submitted a valid Sri Lankan VAT identification number before the planned implementation date. Microsoft warned that invoices issued without a VAT ID would still include VAT, potentially preventing businesses from claiming input tax credits later.
Google has also published country-specific VAT guidance for Google Cloud customers in multiple jurisdictions, advising businesses to provide their tax identification numbers so that invoices reflect the correct tax treatment. While Sri Lanka has not yet been added to Google’s published guidance, industry observers expect similar procedures to be introduced once the country’s Sri Lanka digital services VAT framework becomes fully operational.
The changes are expected to affect a wide range of international digital service providers operating under non-resident billing models. Besides cloud computing platforms, businesses offering software-as-a-service (SaaS), online advertising, streaming services and other digital subscription products are likely to face similar VAT collection obligations once Sri Lanka formally confirms the implementation date.
For Sri Lankan businesses using international cloud and digital platforms, ensuring VAT registration details are correctly recorded with service providers will become increasingly important to avoid unnecessary tax charges and preserve eligibility for input tax credits where applicable.