Sri Lanka land tax for foreigners in 2026: is the 100% transfer tax still in force?
No. Sri Lanka's old 100% tax on land transfers to foreigners was repealed by the Land (Restrictions on Alienation) Act No. 38 of 2014, which replaced it with a ban on freehold. The 15% land lease tax went in 2017. In 2026 a foreign buyer pays stamp duty, and on selling, capital gains tax of 15% (individuals) or 30% (companies).
What was the 100% land transfer tax?
Part VI of the Finance Act No. 11 of 1963 introduced a 100% tax on property transferred to non-citizens, effectively doubling the price. It was abolished in 2002, brought back by Amendment Act No. 8 of 2004 (extended to companies with more than 25% foreign shareholding), and from around 2012 an administrative circular blocked land transfers to foreigners altogether. Section 19 of the Land (Restrictions on Alienation) Act No. 38 of 2014 then repealed Part VI and, backdated to 1 January 2013, instead prohibits transferring land title to foreigners, foreign companies and Sri Lankan companies with 50% or more foreign shareholding. Old articles that quote a 100% tax describe a law that no longer exists. See can a foreigner buy land in Sri Lanka.
What taxes does a foreigner pay when buying?
- On a 99-year lease: stamp duty at 2% of the aggregate rent since 1 April 2025 (confirm how a single upfront premium is treated with your lawyer). There is no land lease tax: the 15% tax in the 2014 Act was abolished in 2017.
- On an apartment: stamp duty on the transfer (3% on the first Rs 100,000, 4% on the balance); VAT may be included in the price of a new unit from a VAT-registered developer.
- Through a company: the company pays transfer stamp duty, and later company tax and filing costs.
The full list, with legal fees and a worked example, is in stamp duty, legal fees and the real cost of buying land.
What taxes apply while I own it or when I sell?
- Capital gains tax on the gain when an investment asset such as land or a building is sold: 15% for individuals and partnerships from 3 June 2026 (previously 10%), and 30% for companies. An individual's principal residence is exempt if owned for the three years before sale and lived in for at least two of them.
- Rental income from a Sri Lankan property is taxable in Sri Lanka under the Inland Revenue Act No. 24 of 2017; see the villa rental yield guide.
- Local rates (assessment tax) to the Pradeshiya Sabha or council.
- No property or wealth tax. An IMF-backed property tax, and an imputed rental income tax proposed in 2024, have been left out of successive Budgets; the President said at a rally reported on 29 September 2026 that the 2027 Budget would include no property tax.
Frequently asked questions
Do foreigners pay 100% tax on land in Sri Lanka?
No. That tax was repealed in 2014. Foreigners cannot take freehold title to land at all, but can lease it for up to 99 years with no special foreigner tax; stamp duty applies to the lease.
Is there still a 15% lease tax for foreigners?
No. The land lease tax introduced by the 2014 Act was abolished by Amendment Act No. 3 of 2017. Only stamp duty is charged on the lease.
How much capital gains tax will I pay when I sell?
15% of the gain for an individual, from 3 June 2026, and 30% for a company. Keep every receipt for the purchase price and costs, because they reduce the taxable gain. A declared price below the real price increases your gain later.
Is a property tax coming in 2027?
Not in the 2027 Budget, according to the President's statement reported by the Daily FT on 29 September 2026. It has been discussed with the IMF since 2024 and could return in a later Budget; we will update this page if it does.
Can I avoid tax by buying in a Sri Lankan friend's name?
No, and you would have no title. Nominee arrangements give a foreigner no legal ownership, and tax is still due on any sale. Use a lawful route: a 99-year lease, an apartment, or a company with under 50% foreign shareholding.
Sources
- Land (Restrictions on Alienation) Act No. 38 of 2014 (sections 2 and 19) and Amendment Act No. 3 of 2017, as set out in our guide can a foreigner buy land in Sri Lanka.
- Capital Gains Tax takes sharp turn: what Sri Lanka's new 2026 rates mean for investors (individuals 15%, companies 30%, principal residence exemption; Act No. 11 of 2026 certified 3 June 2026), Daily FT, 24 September 2026
- Rules pertaining to sale or lease of land to foreigners (history of the 100% transfer tax: 1963, 2002, 2004), Daily FT, 12 September 2014
- No property tax in 2027 Budget: President, Daily FT, 29 September 2026
- Stamp duty rates (transfer and lease), as set out in our guide the real cost of buying land.
General information, not legal advice. Laws and rates change; confirm every point with your own Sri Lankan lawyer before you pay a deposit.
