Living in Sri Lanka: residency from 183 days, tax rates from 6 % to 36 % and capital gains at 15 % since June 3, 2026

In Sri Lanka, Article 69 of the Inland Revenue Act (Act No. 24 of 2017) defines a resident as an individual who resides in Sri Lanka or is present there for 183 days or more during any twelve-month period beginning or ending in the tax year. The Inland Revenue Department (IRD) has published a tax bracket for individuals, ranging from 6 % to 36 %, with a personal relief of 1,800,000 rupees, since April 1, 2025. Act No. 11 of 2026, certified on June 3, 2026, increased the capital gains tax rate for individuals to 15 % and clarifies that the holder of an Investor Category Residence Visa is not a tax resident. This page cites these sources; anything not explicitly stated is indicated as such.

Resident: four cases under Article 69

The text of the 2017 law, certified on October 24, 2017 and published by the IRD, stipulates that an individual is considered a resident for a tax year if they:

• resides in Sri Lanka;
• is present in Sri Lanka during the year, for 183 days or more in a twelve-month period that begins or ends in the year;
• is a Sri Lankan state employee whose spouse is stationed abroad during the year;
• is employed on a Sri Lankan ship, for the duration of this employment.

An IRD opinion dated January 30, 2024, reiterates these four criteria. The tax year runs from April 1 to March 31.

Law No. 11 of 2026 amends Article 69 with effect from April 1, 2025. According to the IRD's opinion of June 8, 2026, the holder of an Investor Category Residence Visa is not considered a tax resident for the year in question, and a person who works abroad for at least one year under contract with an unrelated employer is not considered a resident for the duration of that contract. In the case of a ship, a foreign national deemed a resident is taxed as a resident only on the income from that employment.

What is imposed according to the status

The IRD's Individual Tax Return Guide for the 2025/2026 tax year (April 1, 2025 to March 31, 2026) states that residents must declare their income regardless of its source. Non-residents only need to declare income that originates in or is derived from Sri Lanka. Only non-resident Sri Lankan citizens are eligible for personal relief.

Since April 1, 2025, foreign-source income remitted to Sri Lanka by an authorized bank, in foreign currency, is taxable, with a capped rate of 15% (%) according to the notice of March 26, 2025, and the accompanying guide. The guide further stipulates that the foreign tax credit cannot exceed the Sri Lankan tax due on that income.

Scale and personal relief

The IRD's opinion of March 26, 2025, relating to Law No. 2 of 2025, sets the following scale from April 1, 2025, which is included in the 2025/2026 guide. The amounts are in Sri Lankan rupees (LKR).

The personal relief is LKR 1,800,000, effective from the 2025/2026 tax year. It applies to both Sri Lankan residents and non-residents, up to the limit of taxable income, and cannot be offset against capital gains from the sale of investment assets. The notice of June 8, 2026, does not include a new tax schedule for individuals. A previous table in the guide shows a balance of 15 %; this page uses the rate of 36 % from the notice of March 26, 2025, and Appendix 7 of the guide.

Dividends, interest and rents

The 2025/2026 guide gives the following treatments for a resident.

The guide also mentions exemptions, for example for interest on foreign currency accounts opened with the central bank's approval. Their conditions are not detailed here.

Capital gains: 10 % then 15 %

The 2025/2026 guide indicates that capital gains from the sale of investment assets are taxed at 10 %. The IRD's opinion of June 8, 2026, sets a rate of 15 % for individuals and partnerships, and 30 % for trusts, mutual funds, and non-governmental organizations, effective June 3, 2026. The guide, established prior to this law, also mentions three exemptions for residents:

• a gain not exceeding 50,000 LKR, if the total gains for the year do not exceed 600,000 LKR;
• the main residence, held without interruption for the three years preceding the transfer and inhabited for at least two of those three years;
• shares listed on a stock exchange approved by the securities commission.

The 2026 notice does not say whether these exemptions are modified.

Life insurance: Article 52A

The notice of June 8, 2026, introduces Article 52A, effective April 1, 2025: sums received by a person under a life insurance policy, whether as the policyholder or beneficiary, upon the death of the insured, at maturity, or upon surrender, are excluded from taxable income. This exclusion does not cover employment or business income, annuities, pensions, or other payments not related to death or maturity. It applies to contracts issued by an insurer authorized under Law No. 43 of 2000 on insurance regulation.

Buying land when you are a foreigner

Law No. 38 of 2014 on Restrictions on the Alienation of Land, certified on October 29, 2014, and published by the IRD, prohibits the transfer of ownership of land located in Sri Lanka to a foreigner, a foreign company, or a Sri Lankan company with foreign ownership of 50 % or more, except for the exemptions provided in Article 3. Article 18 stipulates that any alienation contrary to this law is void. Article 5 applies the same categories to leases and caps their term at 99 years. This page is based on the 2014 text; subsequent amendments, exemptions, and the tax treatment of leases are not detailed here.

Coordination with the Franco-Sri Lankan convention

The BOFiP (Official Bulletin of Public Finances) indicates that the convention was signed in Colombo on September 17, 1981, and entered into force on November 18, 1982. Article 27 applies to the tax year beginning in 1982 and subsequent years. The BOFiP list of April 29, 2026, does not mention any amendments, and Sri Lanka is not included in the list of conventions modified by the multilateral convention. The BOFiP does not provide details of the articles; these can be found on our dedicated page about the convention.

What this page does not cover

It does not detail inheritance tax or wealth tax, social security, residency and visa requirements, or the rates stipulated by the tax treaty with France. These matters fall under Sri Lankan law and should be verified with the IRD (Independent Revenue Service). Balmont Conseil is neither a law firm nor a local tax advisor: local tax matters should be verified with a professional based in Sri Lanka. French matters, including the departure declaration, accounts to be declared, and the exit tax, are addressed in our pages on tax residency.

What changes depending on your situation

• Your days spent in Sri Lanka over each twelve-month period, and your place of residence.
• The nature of your income: salary, foreign source income paid by a bank, dividends, rents, sales.
• Your nationality, which determines the personal relief for a non-resident.
• Your residency situation in France and Sri Lanka, year by year.

The rule depends on your situation. No results are guaranteed.