Sri Lankan businesses above the relevant registration thresholds deal with more than one indirect tax at once — VAT on most goods and services, the Social Security Contribution Levy (SSCL) on turnover for larger businesses, and Withholding Tax (WHT) on specified payments to suppliers and service providers. Each has its own calculation basis, its own filing schedule, and its own paperwork.
VAT: The Core Obligation
VAT applies to the supply of most goods and services once a business crosses the registration threshold, and requires accurate input-output VAT tracking on every transaction — not just sales. Getting this wrong is rarely deliberate; it’s usually a symptom of manual bookkeeping where VAT isn’t tagged consistently at the point of sale or purchase.
SSCL: A Turnover-Based Levy
SSCL is levied on turnover for businesses that meet the applicable criteria, separately from VAT. Because it’s calculated on turnover rather than profit, it needs to be tracked continuously rather than estimated at year-end — a business that only reconciles this once a year risks discovering a large, unexpected liability rather than a manageable running total.
WHT: Withholding on Specified Payments
Withholding Tax applies to certain payments made to suppliers and service providers, and the paying business is responsible for deducting and remitting it — not the recipient. This means every supplier bill needs to be checked against WHT rules before payment, which is easy to miss when bills are processed manually or by different people across a growing team.
- Track VAT, SSCL and WHT as separate ledger items, not folded into a single “tax” line
- Apply WHT rules automatically at the point a supplier bill is entered, not after payment has already gone out
- Keep a running SSCL total rather than calculating it only at filing time
AccDoo ERP applies VAT, SSCL and WHT rules automatically as transactions are recorded — see how it works.