Plans are being formulated for a register of all lands in the country in preparation for the introduction of the property and inheritance taxes proposed to be implemented in 2025, the Department of Fiscal Policy reveals.
Speaking to The Sunday Morning Business, Ministry of Finance Department of Fiscal Policy Director General M.K.C. Senanayake stated that discussions were currently ongoing within the ministry to establish a register of all lands in the country as part of the preparatory work being carried out to introduce the proposed property and inheritance taxes under the International Monetary Fund (IMF) agreement.
Elaborating further, he stated: “At present, Sri Lanka does not possess a register of lands. In order to introduce these proposed property taxes, we will have to establish such a register because there must be an identified base. We are introducing this tax in 2025 because we need time to prepare.”
He noted that talks were still in the preliminary stage and that it was not possible to establish a timeline or provide any specifics.
He further stated that a team from the IMF was expected to arrive in the country and carry out a study of the local property market in order to prepare a report which would be utilised by the Government in introducing the property and inheritance taxes proposed for 2025.
It was announced in March 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 were 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.”