Individuals who are non – Citizens or Companies having more than twenty-five percentum of issued capital owned by non-citizens.
Normal stamp duty – as mentioned above
Additional duty - @ 100% of market value.
(the lowest value of the property may be specified by the
Minister of Finance)
Exemptions on additional duty :
- Any property transferred to a licensed bank at an auction conducted by
such bank in the discharge of a mortgage of such property.
- Any property transferred to a Registered Finance Leasing Institution upon a purchase made by such institution where the property has been mortgage to such institution as a security for lease, or in order to execute a lease and an agreement to sell or a loan and an agreement to sell .
- Any property transferred to a licensed bank or a Registered Finance Leasing Institution pursuant to an order of court in an action for recovery of a debt.
- Any property transferred to a licensed bank or a Registered Finance Leasing Institution to carry on their business of banking or finance leasing in such property.
- Any land transferred to an enterprise authorized by the Board of Investment of Sri Lanka (BOI) to setup on such land –
(a) a project to construct not less than one hundred residential housing
units on a piece of land not exceeding ten perches for each such unit or a registered condominium property not less than one hundred units of residential or non-residential accommodation, if the value of such land is met by inward remittance of foreign currency
(b) A project for a construction and operation of a hospital or a hotel where the investment is not less than ten million US Dollars and the purchase consideration of the land is met by inward remittance of foreign currency.
(c) A project relating to infrastructure development or any other development approved by the Minister of Finance and where the investment is not less than fifty million US Dollars and the purchase consideration of the land is met by inward remittance of foreign currency.
(d) A project solely for the manufacture of non-traditional goods for export, for the establishment of its manufacturing plant, office, storage facilities, dormitories for workers where the investment is not less than one million US Dollars and the purchase consideration of the land is met by inward remittance of foreign currency.
- Any Condominium unit situated on or above the fourth floor of any approved condominium, if the value of such unit is met by inward remittance of foreign currency.
- Any property acquired prior to October 5, 2004 by a company and transferred to another company on the dissolution of such transferor company consequent to a merger of the transferee company with the transferor company.
· Mortgages of land & building
All mortgages of land & buildings should also be registered with the Registrar of Lands. The stamp duty on such mortgages was not payable during the period May 01, 2002 to April 03, 2006. With effect from April 04, 2006 the stamp duty has been re-introduced on mortgages @ the rate of Rs.1.00 for each Rs.1000/- or part thereof of the value of the mortgage.
This stamp duty is payable to the Department of Inland Revenue.
However, the mortgages executed for any housing loan not exceeding LKR Three million have been exempted.
The stamp duty on mortgages will be the same irrespective of whether the parties are citizens or non-citizens.
Note: This document contains the general information based on the current legal
provisions. Professional advice may be obtained before acting on such
· Income from rent / lease of land & buildings
Stamp Duty - In these transactions also it’s advisable to enter in to an agreement and register it with the Registrar of Lands. The stamp duty is payable on such agreements to the Department of Inland Revenue @ Rs. 10.00 for each Rs. 1000/- or part thereof of the value of such agreement including any premium (key-money) recovered, with effect from April 04, 2006.
Income Tax - Rent income on land & buildings calculated as per the Inland Revenue Act is liable to income tax and the rate may be between 5% to 35% depending on the total taxable income.
- If this income has been accrued to a Company (Corporate body) then such income will be treated as business income.
- If the rent / lease rent paid by a tenant for one premises is not less than Rs. Fifty Thousand per month or Rs. Five Hundred Thousand per year and if the premises is used for non-residential purposes a with holding tax @ 10% is deductible by the tenant on each such payment when the rent is paid. This tax can be claimed as tax credit by the land lord (the owner) of such premises.
Value Added Tax (VAT) - The VAT is payable @ 15% (currently) if the rent / lease rent is accrued to a VAT Registered person other than on residential premises. Further, the sale of land & buildings other than residential premises will also be liable to VAT at 15% on the value of supply calculated as provided in the VAT Law.
