A major shift is on the way for Sri Lanka's film industry. The government has brought forward a proposal to adjust the VAT calculation system on movie tickets to bring in more fairness and equity.

Sharing the tax burden

President Anura Kumara Dissanayake revealed these plans while presenting the 2027 Budget speech. He explained that tax will no longer apply to the entire price of a cinema ticket in one go.

Instead, the tax will be divided according to the real revenue earned at each point. This means film producers, distributors, cinema hall operators, and the National Film Corporation will each pay VAT strictly based on the share of ticket revenue they receive or are allocated.