In Sri Lanka, several taxes may apply to property ownership and transfers:
- 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.
- 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.
- Value Added Tax (VAT): VAT may apply to the sale of property by developers or builders who are registered for VAT.
- Income Tax: Rental income from property is subject to income tax. The rate depends on the total income of the individual or entity.
- 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.
- 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.
Itโs 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.
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