Sri Lanka has abolished the 15% land lease tax for foreign buyers on leases signed from 1 January 2016, while retaining the 99-year lease limit and 2% stamp duty on qualifying rental values.
Sri Lanka’s government has scrapped the land lease tax (LLT) that foreign buyers once paid on long leases. Foreigners still cannot buy land outright under the Land (Restrictions on Alienation) Act, so a lease of up to 99 years remains the only route.
Foreigners used to pay a 15% land lease tax (LLT) on long leases in Sri Lanka. That tax no longer applies to leases signed on or after 1 January 2016, which is why the long lease is now the standard route for foreign buyers, especially on villa projects.
Under the Land (Restrictions on Alienation) Act, non-citizens could not buy land outright. Rules applied provisionally from a Cabinet decision on 1 January 2013 let non-residents lease state and private land for up to 99 years, subject to a 15% LLT (7.5% in certain cases). The rules covered three groups: individuals who are not Sri Lankan citizens, Sri Lankan companies with 50% or more foreign shareholding, and companies incorporated abroad.
What changed
Amendment Act No. 3 of 2017 removed the LLT. The Land (Restrictions on Alienation) (Amendment) Act No. 21 of 2018 then backdated the relief to leases signed on or after 1 January 2016. The 99-year maximum is unchanged.
What you still pay
Leases carry stamp duty of LKR 20 per LKR 1,000 of aggregate rent, or 2%. For leases over 20 years, the duty is calculated on the first 20 years of rent only.
