• Will decide tax specifics based on report: Finance Min.
• Says study expected to be conducted next year

Specifics of the property and inheritance taxes proposed to be introduced in 2025 will be determined by the Government following a study conducted by a team from the International Monetary Fund (IMF) on Sri Lanka’s property market, the Department of Fiscal Policy of the Ministry of Finance revealed.

Speaking to The Sunday Morning Business, Ministry of Finance Department of Fiscal Policy Director General M.K.C. Senanayake stated that a team from the IMF would arrive in the country and study the property market and prepare a report which would be utilised by the Government in introducing the property and inheritance taxes proposed for 2025.

Elaborating further, he stated: “The specifics with regard to the implementation of these taxes [property and inheritance taxes] such as the rate, tax base, and exemptions will be determined by the Government. The IMF team will only carry out a study on the domestic property market and provide a report of their analysis. 

“There has been no comprehensive study done on the Sri Lankan property market. A majority of property transactions in Sri Lanka are by inheritance and gifts. How we will apply these taxes will be determined based on the data of this independent study.”

Senanayake stated that the IMF team would likely arrive in the country in 2024 to commence the study.

It was announced last week that Sri Lanka would be introducing property and inheritance taxes in 2025 as part of the revenue generation plan the Government had agreed with the IMF. 

According to the programme documents, the following assurances have been given by Sri Lanka: “To reach a primary fiscal surplus of 2.3% of GDP by 2025, we will revamp the property tax system and introduce a wealth transfer tax. In particular, we will introduce a nationwide real property tax and adjust the system of transfers between the central and provincial governments. 

“We will also introduce a gift and inheritance tax with a tax-free allowance and minimal exemptions. Preparatory work for these tax reforms will commence by mid-2023, supported by IMF technical assistance.”