• Upcoming tax will differ from past rental income levy: Govt.
• Design hinges on yet-to-be-built land value registry
• Data-sharing begins between Land Ministry, Valuation Dept.
• Final structure to follow IMF-backed property database rollout by mid-2026

The recently announced property tax to be introduced during H1 2027 will be a sui generis tax that will be designed based on the findings of the proposed property value registry and is not the rental income tax considered by the previous Government, the Department of Fiscal Policy has clarified.

Speaking to The Sunday Morning Business, Department of Fiscal Policy Director General M.K.C. Senanayake revealed that this proposed property tax was not the rental income tax considered by the previous regime. 

However, the Director General conceded that they were yet to decide on how this property tax would be implemented.

He stated that they were still in the process of designing the proposed property tax, adding that they were still collecting data and discussing possibilities for that purpose. 

Senanayake further stated: “We will first be establishing a land value registry. We will then be able to understand what the transaction value in different areas of the country will be.”

He added that for the establishment of this land value registry, the Land Ministry would commence sharing information with the Government Valuation Department.

“At present, that information is already with the Inland Revenue Department (IRD) because it has this data sharing mechanism. In the same vein, the Land Ministry is now sharing that data with the Valuation Department,” he stated.

Accordingly, he noted that once the land value registry was established, they would be in a situation to determine the appropriate modality for imposing the proposed property tax.

The press release published by the International Monetary Fund (IMF) following the Fourth Review under Sri Lanka’s Extended Fund Facility (EFF) provided that Sri Lanka had stated as follows: “We are planning to introduce property taxes by 2027 H1. In the meantime, building adequate information on property valuation is key. 

“The first step in the process requires a database on historical valuation records. To this end, we are working to digitise the valuation records held by the Government Valuation Department, starting with municipal councils. We plan to complete this process by end-2025. 

“Next, a database on market value estimates is required. We have thus put in place a provisional digital nationwide Sales Price and Rents Register (SPRR). We have resolved outstanding data sharing constraints and will establish the final SPRR by end-September 2025 (SB, end-June 2025). 

“Finally, we will combine the historical digitised records with the SPRR to generate a final database of properties with estimated market values by June 2026. This database will be the key resource for the assessment of property values and the basis for several taxes, including property taxation and capital gains taxation. 

“We will also ensure that this database will be accessible to the IRD (including the HWI unit), the Valuation Department, the land registry, and the public by September 2026.”