2016 Budget - Mansion tax, no tax on land leases for foreigners

The 2016 Budget proposes to remove taxes on land leases, ease restrictions on land transfer and no Mansion Tax for condominiums. 

Below are the relevant extracts.

Land (Restriction on Alienation) Act

The budget proposes to remove the tax imposed on the leasing of land to foreigners and also to consider the removal of restrictions on ownership on identified investments imposed through the Land (Restrictions on Alienation) Act, which has been an impediment for attracting investments to the country.

The key changes are:

(i) Restriction on transfer will be removed for certain identified investments.

(ii) Tax on leasing of lands will be removed.

(the relevant provisions of the Land (Restriction on Alienation) Act No. 38 of 2014 will be amended]

Mansion Tax (PART VIII of the Finance Act No. 10 of 2015)

(i) The mansion tax applicable on condominium units will be removed; and 

(ii) The first installment of the Mansion tax is payable on or before March 31, 2016. 

(PART VIII of the Finance Act No. 10 of 2015 will be amended)

Digital 'Land Bank'

The budget proposes to introduce a “land bank” which is an electronic database of state-owned lands. Subsequently, this database can be extended to contain records of the privately owned land as well.

Sri Lanka to ease land issues for investors

Sri Lanka government is reviewing existing laws on state-owned lands to broad-base ownership, relax the land use ceiling and remove restrictions on foreigners buying land. A new draft bill is now being prepared with the aim of providing provisions to provide ownership of land without being affected by the Land Restriction and Alienation Act.

Local and foreign investors as well as entrepreneurs will be encouraged to expand their businesses clearing impediments in obtaining land and buildings under the government’s mid-term economic plan.Restrictions on foreigners, companies and locally incorporated firms with over 50 per cent foreign ownership from buying land in the country will be removed.

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(Source: Sunday Times)

Sri Lanka CT Holdings suspends Kotahena condo project

C T Holdings PLC has said it has suspended its joint venture property development project to build high-end condominiums in the Kotahena suburb of the Sri Lankan capital Colombo which has been subject to lengthy delays.

The drop in the group’s turnover and profitability of its real estate business in the September 2015 quarter has been attributed partly to “the deferment of the joint venture property development project undertaken with foreign collaboration,” it said.

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(Source: EconomyNext)

Sri Lanka to restrict revocation of deeds of gift

Sri Lanka plans to draft legislations to make provision for revocation of irrevocable deeds of gift to provide greater security for lending institutions who lends money using property as collateral, cabinet spokesman Rajitha Senaratne told reporters on Thursday.

Health Minister Rajitha Senaratne said issues have been raised on the rights of donees as the Court of Appeal upheld a judgment of a District Judge wherein the court had held that a donor can revoke an irrevocable deed of gift by executing a deed of revocation without filing action and obtaining a decision of court.

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(Source: LBO)

Sri Lanka needs to lure big real estate investors, funds: Platinum1’s Kishore Reddy

Sri Lanka’s real estate market’s full potential needs to be tapped through big investments funds which can pave the way for the island to join its regional counterparts, a property developer said.

“The big real estate investment funds and investors have not come to Sri Lanka yet and some of them haven’t even heard of us yet,” Kishore Reddy, managing director, Platinum1said.

“They are yet to tap our market, but when this happens only then will Sri Lanka’s real potential in the sector will be seen.”

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(Source: LBO)

Officials get ready to collect hundreds of millions in extra taxes

With six finance bills coming into effect from Friday, the Government is taking measures to collect hundreds of millions of rupees in taxes, Inland Revenue Commissioner General Kalyani Dahanayake said.

Mansion Tax
Rs. 1 million will be levied annually from owners of houses worth Rs. 100 million or more or houses with a floor area exceeding 5000 square feet. The tax would be collected through the local authorities. This will be in addition to local authority rates and taxes.

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(Source: Sunday Times)

Prime Minister to propose scrapping ‘expropriation’ laws

Prime Minister Ranil Wickremesinghe is to propose scrapping controversial expropriation laws and some changes to land ownership laws during a special statement in Parliament on Thursday on the Government’s mid-term strategy.

The source added that when the government moves to acquire private property, bad signals go out. “The reasons may be justified, but the very intention of using state power to deprive legitimate owners of their property encourages and activates the worst elements. And this will not attract FDI.” Similarly, he said the Land (Restrictions on Alienation) Act restricting land ownership by foreigners, foreign companies and companies registered in Sri Lanka also deter FDI.

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(Source: Sunday Times)

Indian real estate company Sandal Lands enters Sri Lanka with $10 mln investment

One of India’s leading real estate companies, Sandal Lands has entered Sri Lanka with an investment of US$ 10 million. The company is in discussions with the Urban Development Authority of Sri Lanka, said Sanjay Kathuria, Director of Sandal Lands at a media briefing in Colombo last week.

Mr. Kathuria said, “The initial phase of the investment will be US$ 10 million and later on we will go up to US$ 25 million.” Recently the company partnered with the government of Maldives and Sri Lanka is the second international market for Sandal Lands, he added.

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(Source: Sunday Times)