Stamp Duty
1. Deed of Transfer:
•3% for the first USD 751 (LKR 100,000).
•4% for every additional USD 751 (LKR 100,000) or part thereof.
2. Lease Agreements:
•USD 0.1 (LKR 10) per USD 7.5 (LKR 1,000) or part thereof.
Land Tax on Leases
The land tax applies in specific cases:
1.15% Land Tax:
Applicable to:
•Foreign individuals.
•Foreign companies.
•Sri Lankan-incorporated companies with 50% or more foreign shareholding (direct or indirect).
2.7.5% Reduced Land Tax:
Applies under these conditions:
•Lease to a Sri Lankan-incorporated company (with >50% foreign shareholding) that has actively operated in Sri Lanka for 10 consecutive years prior to the lease.
•Land transferred to a subsidiary where the holding company (foreign-owned >50%) has operated for 10 consecutive years in Sri Lanka.
•Condominium parcels:
•Above the 4th floor for leases less than 35 years.
•Below the 4th floor for leases over 99 years.
•Lease in Special Licensed Zones, Tourist Development Areas, or Industrial Estates.
•Cases with substantial foreign investments, approved by the Cabinet of Ministers.
Exemptions from Lease Tax
No lease tax applies in the following cases:
•Land leased to:
•Diplomatic Missions or International Organizations under the Diplomatic Privileges Act.
•Dual citizens of Sri Lanka.
•Foreign investors with pre-2013 agreements complying with inward remittance rules.
•Long-term leases (35+ years) for condominium parcels above the 4th floor, paid entirely via foreign remittance.
•Land in Bonded Areas or Free Ports.
•Leases approved under Strategic Development Projects or for foreign companies relocating international or regional operations.
Payment Responsibility
•Stamp Duty: Paid by the purchaser in property transfers or the lessee in lease agreements, unless otherwise agreed.
Foreign investors should consult legal and financial advisors to ensure compliance with these tax obligations and benefit from applicable exemptions or reduced rates.
