What are the mandatory requirements for a Tax Invoice in Sri Lanka?

A valid Sri Lankan Tax Invoice must contain: the words TAX INVOICE, supplier name and registered address, Taxpayer Identification Number (TIN), 12-digit VAT registration number, unique serial number, date, customer name and address, itemized description, and separate 18% VAT breakdown.

How do I calculate 18% VAT and 2.5% SSCL on an invoice?

First, calculate the 2.5% Social Security Contribution Levy (SSCL) on the chargeable turnover. Then add SSCL to the chargeable base to compute the 18% Value Added Tax (VAT). Finally, sum the chargeable base, SSCL, and VAT to obtain the total payable amount in LKR.

IRD Compliance Directive

Tax invoice format:
IRD compliance, 18% VAT & legal guide.

A definitive practical guide for Sri Lankan registered businesses, service providers, and contractors. Learn mandatory Inland Revenue Department (IRD) disclosures under Section 20 of the VAT Act, statutory SSCL and VAT compound sequencing, and how to issue audit-proof tax invoices online.

Section 20 VAT Act No. 14 18% VAT & 2.5% SSCL Compound Formula RAMIS Audit Verified Updated for 2026

Statutory Disclosures

Mandatory particulars required under Sri Lankan tax law

Under Section 20 of the Value Added Tax Act, an invoice cannot serve as an official "Tax Invoice" unless it explicitly contains the following statutory information.

Issuer Legal Particulars

Supplier details & IRD tax registration

Every tax invoice must unequivocally identify the registered business entity issuing the document:

• Registered company trade name & registered business address

• Taxpayer Identification Number (TIN)

• 12-Digit Value Added Tax (VAT) Registration Number

• Business Registration Number (BRN) from ROC or Provincial Secretariat

• Direct contact telephone and official corporate email

Statutory Supplier Identification TIN • 12-Digit VAT PIN

Document Disclosures

Title, serial sequence & recipient details

For your corporate client to claim input tax credits in their IRD RAMIS filings, these criteria must be fulfilled:

• The words "TAX INVOICE" prominently displayed at the top

• Unique, sequential, non-repeating serial invoice number

• Precise date of issue and delivery date of supply

• Recipient customer legal entity name and delivery address

• Recipient's TIN and VAT number (mandatory for corporate input claims)

RAMIS Input Credit Compliant Sequential Serial Required

Tax Mathematics

Calculating 18% VAT and 2.5% SSCL in strict sequence

Sri Lankan tax regulations mandate compound sequencing when both the Social Security Contribution Levy (SSCL) and VAT apply to a commercial invoice.

STEP BY STEP Calculation Flow

The IRD Compounding Rule

1. Base Chargeable Scope: Total value of goods and professional services supplied.

2. SSCL (2.5%): Calculated directly on the chargeable turnover base.

3. VAT Base: Compounded base equals Chargeable Scope + 2.5% SSCL.

4. VAT (18%): 18% applied on the compounded VAT base.

5. Total Payable: Base + SSCL + VAT.

WORKED EXAMPLE LKR 100,000 Scope

Standard Commercial Supply

Chargeable Goods & Services LKR 100,000.00

SSCL (2.5% on Turnover) LKR 2,500.00

Compounded VAT Base LKR 102,500.00

VAT (18% on LKR 102,500.00) LKR 18,450.00

Total Tax Invoice Payable LKR 120,950.00

Commercial Cycle

From initial quotation to official tax invoice

The standard commercial sequence for billing corporate and institutional clients in Sri Lanka.

STAGE 01

Commercial Quotation

Issue an itemized quotation with estimated costs, unit quantities, and validity dates. At this stage, no tax liability is triggered under Sri Lankan law until the offer is accepted.

Commercial Offer

Validity Window • Advance Terms

STAGE 02

Purchase Order & Delivery

The client issues an official Purchase Order (PO). Mobilization commences upon receipt of the advance payment, followed by completion of work or equipment handover at the client site.

Contract Execution

PO Sign-Off • Site Delivery

STAGE 03

Official Tax Invoice

Issue the sequential Tax Invoice displaying your 12-digit VAT registration number. This legally triggers input tax credit eligibility for the client and domestic payment settlement.

Statutory Finality

RAMIS Compliant • Bank Settlement

Statutory Threshold Rule

Operating legally below the IRD registration threshold

Under Section 66 of the VAT Act No. 14 of 2002, issuing an unauthorized document titled "Tax Invoice" or levying VAT without an active 12-digit IRD registration certificate is a criminal offence.

Section 66 Compliance Statutory Guideline

“Sole proprietorships and non-registered contractors must issue commercial quotations or invoices labeled 'Net Payable Amount' with zero VAT or SSCL charged.”

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