Sri Lanka tax research

An orientation to the published research, tools, policy analysis and primary sources currently available for Sri Lanka.

This orientation links to published material; it does not replace underlying source documents or advice for an individual situation.

Published research

Sri Lanka: Capital Gains & Enhanced Capital Allowance Rules You Should Know — Sri Lanka has revised capital gains rates and granted 100% Enhanced Capital Allowance for large capital investment—learn how this affects your investments and business assets.
Setting up an Entity in Sri Lanka: How to Maximize Tax Incentives (ECA, CGT & Structure) — Sri Lanka offers generous incentives like Enhanced Capital Allowances and varied capital gains tax rates—this guide shows how to structure your business entity to benefit most.
Sri Lanka: Digital Nomad Guide – Tax Residency & Offshore Income Rules — Planning to live and work remotely in Sri Lanka? Here’s what you need to understand about tax residency, foreign income, and living expenses under the 2026 regime.
Entity Setup & Cross-Border Case Study: Sri Lanka’s Capital Gain Tax & ECA Changes (2026) — A look at Sri Lanka’s revised capital gains tax regimes and enhanced capital allowance provisions—what they mean for foreign investors establishing entities there.
Sri Lanka: Compliance Guide for Social Security Contribution Levy (SSCL) Changes — Sri Lanka has reduced SSCL registration thresholds and made motor vehicles subject to SSCL at import but exempted wholesale/retail sales — here’s how businesses can adapt.
Compliance in Sri Lanka: What the Inland Revenue Act Amendments Mean for Withholding and VAT — Sri Lanka’s Inland Revenue Amendment Act No. 11 of 2026 introduces prosecutorial powers and changes to Value Added Tax rules. Here’s what withholding tax agents and VAT-registered businesses need to know to stay compliant.
Entity Setup Strategies for Non-Residents in Sri Lanka Under the Inland Revenue Amendment Act No. 11 of 2026 — New rules in Sri Lanka change residency status and tax treatment for non-citizens with residence visas, plus special rates for capital gains and incentives for large investments—key for non-resident setups.
Cross-Border Digital Nomads: Residency & Capital Gain Tax Changes in Sri Lanka — Sri Lanka’s updated residency rules and revised capital gains taxes bring both risks and planning openings for remote workers and expats.
Digital Nomad & Cross-Border Income in Sri Lanka: Foreign Tax Credit Under New Law — Sri Lanka’s Inland Revenue (Amendment) Act, No. 11 of 2026 now allows instalment payers to claim foreign tax credit — a crucial benefit for digital nomads and cross-border service income earners.
Case Study: Sri Lanka’s Capital Gain Rate Shift, Interest Waiver & ECA — Smart Moves for Investors — Sri Lanka has revised its capital gains tax rates, granted generous enhanced capital allowances, and introduced interest waivers — here's how investors can position themselves.
Sri Lanka | Digital Nomads & Foreign Earned Income — Revised Rules 2026 — Sri Lanka has clarified rules on foreign-worked contracts, remittance, and non-resident tax status — a new pathway for digital nomads starting 1 April 2025.
Sri Lanka’s New Compliance Deadlines & Relief Measures as at August 2026 — Sri Lanka has recently revised several compliance obligations and introduced relief measures affecting quarterly instalments, income tax payments, and capital gains. Important for businesses and individuals ahead of the upcoming tax dates.
Sri Lanka’s New VAT Invoice Format: What Businesses Should Do Now — From 1 July 2026, all VAT-registered taxpayers in Sri Lanka must use a revised invoice format or risk compliance issues — here’s a roadmap to get ready.
Compliance Strategies for Capital Gains and Interest Income in Sri Lanka — Sri Lanka’s 2026 amendments revise capital gains tax, allow enhanced capital allowances, and offer interest waivers—but come with deadlines you need to act on.
Sri Lanka | Capital Gains, Enhanced Capital Allowances & Self-Declarations for Interest Income — Sri Lanka’s 2026 Amending Act brings material changes: updated CGT rates, enhanced allowances for large investments, and streamlined rules for resident individuals receiving interest.
Sri Lanka’s E-Invoicing & VAT Invoice Format Overhaul: What VAT Registered Businesses Must Do — Sri Lanka’s Inland Revenue Department is rolling out standardized tax invoice formats, and beginning national e-invoicing via API. Key dates, compliance steps, and risk for non-compliance.

Recent policy analysis

Inland Revenue (Amendment) Act, No. 11 of 2026 (Sri Lanka): Changes to Resident Status for Investor Category Residence Visa Holders — Sri Lanka’s Amendment introduces a provision that individuals holding an **Investor Category Residence Visa** issued by the Controller of Immigration and Emigration shall **not be regarded as residents** for income tax purposes merely by that status. This limits the tax liability for foreign income for such visa-holders, reducing cross-border taxation risk. Enacted and effective as per Act No. 11 of 2026.
Circular SEC/2026/E/03: Revised VAT Tax Invoice Format in Sri Lanka — In Sri Lanka, the Inland Revenue Department issued Circular SEC/2026/E/03 establishing a revised Tax Invoice format under the Value Added Tax Act No. 14 of 2002. All VAT-registered persons must adopt the new format effective from 1 July 2026. The previous format is withdrawn as of that date. Purpose is to strengthen compliance, standardize practices and facilitate digital tax administration. Non-compliance risks include invalid invoices and rejected VAT claims.
Inland Revenue (Amendment) Act, No. 11 of 2026 — Amends Sri Lanka’s tax law to alter residency rules for individuals holding an Investor Category Residence Visa (they will not be treated as residents for tax on foreign income except employment on ships), revises capital gains tax rates (e.g. individuals/partnerships at 15%, trusts/mutual funds at 30%), introduces 100% Enhanced Capital Allowance for investments > USD 250,000 in new business undertakings, and includes interest waiver for late/under-paid tax extending to years up to 2024/25. Effective from 3 June 2026 for certain provisions, and from 1 April 2026 for others.
Circular No. SEC/PN/IT/2026/02 – Revised Capital Gains Tax Rates & Enhanced Capital Allowance (Sri Lanka) — Sri Lanka’s Inland Revenue Department via circular SEC/PN/IT/2026/02 updated **Capital Gain Tax rates** across individuals, partnerships, trusts, unit trusts and NGOs effective **3 June 2026**, and introduced **100 % Enhanced Capital Allowance** (ECA) for new business undertakings investing over USD 250,000 in depreciable assets. Also provided interest waiver on late/underpayments for AY 2024/25 if principal is paid by 2 December 2026. These changes provide incentives for investment and clearer tax treatment for disposal of assets.
Revision of rates & relief measures under Sri Lanka’s Inland Revenue Act (Circular SEC/2026/E/06 etc.) — Sri Lanka’s Inland Revenue Department (Circular SEC/2026/E/06, re-revised in August 2026) has revised rules for calculation of quarterly income tax instalments for Y/A 2026-27. Other changes include new capital gains rates (Individuals/Partnerships 15 %, others 30 %) effective 3 June 2026; enhanced capital allowance (100 % for qualifying assets exceeding USD 250,000 in new business undertakings); and interest waiver for late/under payments up to Y/A 2024-25 if principal tax is paid by 2 December 2026.
Sri Lanka – Inland Revenue Amendment Act No. 11 of 2026: Capital Gains Tax Rates and Enhanced Capital Allowances — Sri Lanka’s Act No. 11 of 2026 certified 3 June 2026, implements revised CGT rates (15% for individuals/partnerships; 30% for trusts, unit trusts, NGOs), introduces 100% Enhanced Capital Allowance for new business investments exceeding USD 250,000 from 1 April 2026, and offers interest waiver on late/under-payments up to Y/A 2024-25 if principal tax paid by 2 December 2026.
Circular SEC/PN/IT/2026/02 – Sri Lanka: Capital Gains & Enhanced Capital Allowances & Interest Waiver — Revises capital gains tax rates (15% for individuals/partnerships; 30% for trusts & funds), grants 100% Enhanced Capital Allowance (for investment > USD 250,000 in depreciable assets) for new business, and waives interest on late/underpaid tax up to Y/A 2024-25 subject to full principal payment by 2 December 2026.
Revision of Capital Gains Tax Rates; Enhanced Capital Allowances; Interest Waiver – Sri Lanka — Sri Lanka: Under Inland Revenue Notice SEC/PN/IT/2026/02, with effect from 3 June 2026 chapter on Revised Capital Gains Tax rates (individuals/partnerships taxed 15%, trusts/funds/NGOs at 30%), Enhanced Capital Allowances for depreciable assets over USD 250,000 from 1 April 2026, and waiver of interest on late or underpayments (up to AY 2024-25) if principal is paid by 2 December 2026. These measures offer relief but require timely payment and accurate categorization.
Sri Lanka — Revision of Capital Gain Tax Rates, Enhanced Capital Allowances & Interest Waiver (Notice SEC/PN/IT/2026/02) — Under SEC/PN/IT/2026/02 published 3 June 2026, Sri Lanka revised capital gain tax rates (15% for individuals/partnerships; 30% for trusts, unit trusts etc.), introduced 100% Enhanced Capital Allowance for new business investment exceeding USD 250,000, and waived interest on late/under-payments up to AY 2024-25 provided principal paid by 2 December 2026.
Foreign Tax Credit allowed for Instalment Payers (Sri Lanka) under Inland Revenue (Amendment) Act, No. 11 of 2026 — In Sri Lanka, Inland Revenue (Amendment) Act, No. 11 of 2026 permits instalment payers for any Assessment Year commencing **on or after 1 April 2026** to account for foreign tax credit in determining tax liability. Credit can be claimed only if foreign income tax is paid or reasonably estimated. This aids taxpayers with cross-border incomes and foreign tax payments.