Sri Lanka Moves To Reinstate 100% Land Tax

by Lorys Charalambous, Tax-News.com, Cyprus

09 September 2004

The Sri Lankan Parliament has voted to restore a 100% tax on land purchasers by foreign nationals.

The reinstatement of the measure abolished under a previous government has been proposed by the Marxist People’s Liberation Front, a key member of the governing coalition, to prevent Sri Lankans being priced out of the property market by foreigners purchasing holiday homes on the island.

However, Finance Minister Sarath Amunugama has assured foreign nationals that they will not be completely barred from buying land in the country, and purchases will still be achievable through a company set up under the government’s Board of Investment, or companies adhering to the BOI’s regulations.

"We are not against foreign investment,” said Mr Amunugama. “BOI companies will get an exemption, this is not any attempt to ban the purchase of land."

The previous government of former Prime Minister Ranil Wickremesinghe repealed the property tax as part of its efforts to woo foreign investment in 2002. However, Wickremesinghe’s party was ousted from power in last April’s election.

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