What are the property ownership Taxes?

In Sri Lanka, several taxes may apply to property ownership and transfers:

  1. Capital Gains Tax: Capital gains from the sale of property are subject to tax. However, there are exemptions, such as for a gain from the realization of a capital asset by an entity fully owned by the Government of Sri Lanka if the gain is deemed essential for economic development and has prior written approval from the Minister.
  2. Stamp Duty: This is a tax on legal documents and must be paid when transferring property. The rate can vary depending on the value of the property and the nature of the transaction.
  3. Value Added Tax (VAT): VAT may apply to the sale of property by developers or builders who are registered for VAT.
  4. Income Tax: Rental income from property is subject to income tax. The rate depends on the total income of the individual or entity.
  5. Withholding Tax: Certain payments related to property, such as rent, may be subject to withholding tax, where the payer is required to withhold tax and remit it to the Inland Revenue Department.
  6. Other Exemptions and Deductions: There are specific exemptions and deductions available under the Inland Revenue Act, such as for individuals who transfer land or a building situated in Sri Lanka to an associate, under certain conditions.

It’s important to consult the latest tax regulations or a tax professional for the most current information and to understand how these taxes apply to specific circumstances.

For More Information about Taxation in Sri Lanka Register with LankaTAX AI: www.lankatax.net

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