INSUBCONTINENT EXCLUSIVE:
Wasantha Athukorala, a professor in the Department of Economics and Statistics at the University of Peradeniya, alleges that the government
is working to introduce an imputed rental income tax, as the government failed to prepare plans for the implementation of a property tax by
April 2025, as proposed by the International Monetary Fund (IMF).Furthermore, Prof
Athukorala expressed that if a property tax is implemented in the country, all ill-gotten gains will be exposed.It was announced that Sri
Lanka will likely introduce an imputed rental income tax, as part of the ongoing revenue mobilization efforts
The new tax comes as a substitute for the property tax, as the introduction of the property tax and the gift and inheritance tax by 2025
encountered delays, due to constitutional restrictions on sharing revenues between the central and local authorities and the lack of
adequate information on property values.Accordingly, Sri Lanka will promptly initiate preparatory work to introduce an imputed rental income
tax, though the expected gains would only fully materialize in 2026.The imputed rental income tax on owner-occupied and vacant residential
properties will be introduced before the beginning of the tax year on April 1st, 2025, as per the IMF Country Report No
24/161.To ensure that the imputed rental income tax is fully operational by 2026, Sri Lanka will undertake the following measures;Establish
August 2024 (new Structural Benchmark)
This would help determine the capital values of these properties.Introduce a provisional nationwide digital Sales Price and Rents Register
Ensure that the SPRR is fully established and operational by end-March 2025 and that it is accessible by the IRD, the valuation department,
the land registry and the general public (new structural benchmark)
A fully operational digital SPRR would be the key resource for the assessment of property values and hence the basis for several taxes,
among relevant government entities
sales information with the IRD
The Notaries Act will be amended by April 2025 to ensure comprehensive information on each notarized real property contract (which will
include the valuation roll, the cadastral number, and a unique tax ID) is automatically fed into the digital SPRR.
