Is Booking.com included in Sri Lanka’s new Digital VAT?

Yes, and this could significantly impact the tourism industry.

Starting July 1, 2026, global digital platforms like Booking.com and Agoda are expected to charge 18% VAT under Sri Lanka’s new digital tax framework.

For many tourism businesses, this sounds like bad news.

But in reality, this may be the push the industry needed to finally focus on direct bookings and digital independence.

For years, hotels and tourism operators relied heavily on OTAs while losing a large percentage through commissions and platform dependency. Now, with VAT added on top, booking through these platforms becomes even more expensive for travellers.

This creates a huge opportunity for businesses with strong direct booking websites.

A well-optimised website allows tourism businesses to:

• Reduce dependency on OTAs
• Increase profit margins
• Build direct customer relationships
• Improve repeat bookings
• Receive payments instantly
• Control branding and customer experience

Instead of competing only on price, businesses can now attract direct bookings through better experiences, exclusive offers, and stronger digital marketing.

Long term, this shift could actually strengthen Sri Lanka’s tourism ecosystem.

It encourages local businesses to invest in SEO, booking technology, branding, and their own digital presence rather than depending entirely on foreign platforms.

The businesses that adapt early will have the advantage.

This is no longer just a tax discussion.
It’s a digital transformation moment for Sri Lankan tourism.