Guide to buying property in Sri Lanka for foreigners and expats

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What are the rules and regulations for expats and foreigners buying and renting property in Sri Lanka ?

Foreigners can no longer purchase property in Sri Lanka and can only lease it for up to 99 years (previously a foreigner could purchase property by paying a 100% tax).

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

Read full details in the Land Act No. 38

Buying land

Sale of land to foreigners has been prohibited from the 2013 budget. Instead the land can only be leased out for a max of 99 years. Foreigners or companies (with more than 50% foreign ownership) no longer need to pay the 15% land tax from 1st Jan 2016 (LAND (RESTRICTIONS ON ALIENATION) (AMENDMENT) - issued 2nd Sept 2016)

Taxes for landlords

Anyone leasing out a property to a foreigner or local will need to pay a 1% stamp duty when the rent is collected.
VAT is payable at 15% if the lease is to a VAT Registered person, other than on residential premises. Further, the sale of land & buildings other than residential premises will also be liable to VAT at 15% on the value.

Capital Gains tax

The government is considering bringing in Capital Gains tax, however there is no confirmation on when this will be brought in or the details of how it'll be implemented. A Capital Gains tax is the taxable percentage of the profits earned through the sale of any investments, which could be through the sale of stocks or property.



Update 02/09/2016 - The 15% tax on land lease for foreigners was removed from 1st Jan 2016 via the LAND (RESTRICTIONS ON ALIENATION) (AMENDMENT) gazette

Update 31/10/2014 - Land (Restrictions and Alienation) Act published. Read it from here

Update 03/08/2014 - New legislation is being drafted to strictly enforce rules pertaining to the 2013 ban on foreigners owning land. There will be a tax of 15 per cent on the value of the lease. With new laws you are also not allowed to circumvent this ban by purchasing the land through a majority Sri Lankan nominee owned company. It's assumed that this law will not apply to foreign-owned companies of more than 10 years (TBC). More>>

Update 03/11/13 - the Investment Promotion Ministry is to submit a cabinet paper to reduce the land transfer tax to below 10 per cent to facilitate foreigners seeking to lease land.

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

Last update: July 2015

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