ANNOUNCEMENT 29 Oct 2014
In October 2014, Sri Lanka announced an Act to ban the sale of land to foreigners.
NUMBER OF INTERVENTIONS
LAND (RESTRICTIONS ON ALIENATION)
ACT, No. 38 OF 2014
On 29 October 2014, Sri Lanka through the Land (Restriction of Alienation) Act, No. 38 of 2014, banned the sale of land in Sri Lanka to foreigners, foreign companies, and local companies wherein foreign shareholding is 50% or above. If any land is sold to a local company with a foreign shareholding of less than 50%, the company has to maintain a shareholding of less than 50% for at least 20 consecutive years to maintain the legal validity of the land transfer. Land, henceforth, can only be leased to such foreigners or foreign-owned companies with a maximum lease period of 99 years. Further, a Land Lease Tax at the rate of 15% of the total rental payable has been introduced on the lease of all such land. This tax is required to be paid up-front for the entire lease period.
There are certain exceptions to the restriction of the sale of land and also exceptions to which a reduced 7.5% lease tax is chargeable. Please refer to the attached documents for the same.
The Act has been made applicable retrospectively from 1 January 2013.
The Land Lease Tax has been later abolished from 8 January 2017.