The Sri Lankan government plans to introduce a nationwide property tax by the first half of 2027, as part of a broader fiscal reform agenda agreed under its ongoing program with the International Monetary Fund (IMF).

According to the IMF’s Fourth Review under the Extended Fund Facility, the proposed property tax aims to strengthen Sri Lanka’s revenue base and support fiscal consolidation efforts. The government is expected to complete the necessary groundwork—including a database of market property values—by mid-2026.

The government’s intention to proceed with developing the data infrastructure for this tax program was detailed in a letter of intent addressed to Kristalina Georgieva, the Managing Director of the IMF.

“We plan to continue building the data infrastructure for a possible property tax. We are planning to introduce property taxes by 2027H1. 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 digitize 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 digitized 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” the document signed by President Anura Kumara Dissanayake said.

In 2024 when the Property Tax was first discussed, the Finance Ministry justified the tax saying it was warranted to reach revenue goals and assured only the wealthy will be targeted.

Finance Ministry said the focus of this tax is on high wealth individuals, and not on average income earners. This objective will be achieved by a suitable tax-free threshold to ensure that the tax is targeted on very high value property or multiple properties that are owned by wealthy members of society.

So far no details have been released on how this property tax will be implemented. (Newswire)

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The Government intends to introduce the proposed Property Tax in 2025, State Minister of Finance Ranjith Siyambalapitiya said. 

Speaking to the media, the State Minister said the Property Tax will be imposed on persons owning a large number of properties.

Stating that a thorough study is being conducted in this regard, the State Minister said that the tax will be introduced in a manner that does not affect the ordinary citizen. 

Through this tax, the local government institutions will be strengthened and the common people will benefit from it, he added. 

The State Minister of Finance further said the Government has no plans to introduce new taxes which will result in the cost of essential items going up. (NewsWire)

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The government plans to introduce a new property or wealth tax in 2025, State Minister of Finance Ranjith Siyambalapitiya said. 

The State Minister revealed that the new property tax will be formulated in accordance with the recommendations of the International Monetary Fund (IMF).

The IMF is of the view that a property tax that has been proposed will be a key source of additional revenue for the government in the year 2025, he said.

State Minister Siyambalapitiya further said that the proposed new property tax will be introduced following a thorough analysis. 

The new property tax is being introduced with the aim of taxing persons owning a large number of properties.

Through this tax, the local government institutions will be strengthened and the common people will benefit from it, he added. 

State Minister Ranjith Siyambalapitiya made the remarks while addressing the media in Ruwanwella on Sunday (Oct 29). (NewsWire)

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