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Guide to buying property in Sri Lanka for foreigners and expats

What are the rules and regulations for buying property in Sri Lanka for foreigners and expats (non-citizens) ?

There is a 100% tax on any property purchased by non citizens, or a company incorporated in Sri Lanka with more than 25% of foreign participation in the equity. This is on top of the 3% legal tax (Please see the links below on Stamp Duty for full details). So, if a property is valued at $100,000, you will need to pay $203,000. This may be circumvented by arranging a 99 year lease, or in condominiums(apartment blocks), by buying above a certain story(floor).

Sale of land to foreigners has been prohibited from the 2013 budget. Instead the land can only be leased out. Any land leased to foreigners will still incur a 100% tax.
Update 13/05/13 - Foreigners can now buy land if their investment in the project is over $10 million. Alternatively they can lease the land (for up to 99 years) and pay a tax of around 5-10%.

Foreigners will be exempted from the tax under the following circumstances:

  • Investment in a project is over US$10 million
  • A joint venture company incorporated in Sri Lanka (with foreign participation) is not liable to pay the tax
  • Condominium units of residential or non-residential accommodation on or above the 4th floor of a registered condominium apartment constructed with the approval of the UDA
  • Land for the development of large housing schemes, hospitals and hotels with a minimum investment of $10 million
  • Exporting companies with a minimum investment of $1 million
  • Large infrastructure projects with a minimum investment of $50 million

17/02/13 - Sri Lankan expats holding foreign citizenship can now buy land in Sri Lanka. More>

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Further reading:
100% land sale tax for foreigners to be scrapped
Tax for foreigners when buying land in Sri Lanka
Sri Lanka Property Buying Guide for Foreigners
Sri Lanka Investment Climate Statment 2011
Chambers Colombo
Gazette No 1386/18 dated March 30, 2005
Stamp Duty - Gazette No 1439/3 dated April 3, 2006
Stamp Duty guide from Inland Revenue

 

 

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