Foreigners will only be able to purchase land in Sri Lanka through long lease agreements and purchases will be subject to payment of a land lease tax (LLT), under the Land (Restrictions on Alienation) Act.
According to current regulations which have been provisionally applied since a Cabinet decision on January 1, 2013, non-residents are now allowed to “acquire and enjoy” state and private lands only on a lease basis for up to 99 years, subject to an LLT of 15 percent. A lower rate of 7.5 percent is applicable in certain circumstances.
In par with Monetary Law Act of 1983, 100% tax was imposed on the transfers of land ownership to foreigners. This was repelled in 2002 by then Government allowing lands to get transferred to non-nationals. After Sri Lanka came to power, in 2004 they imposed the 100% tax, which lead to certain complications demanding a national policy. The new laws will provide two separate regulations for freehold and leasehold transactions.
The provisions of the Act will be applicable to individuals who are not citizens of Sri Lanka, companies incorporated in Sri Lanka with a foreign shareholding of 50 percent or more, and foreign companies incorporated in other countries.
