Starting April 1, 2025, the International Monetary Fund (IMF) will introduce a tax on both occupied and vacant residential properties to increase government revenue.
This plan is outlined in the IMF’s latest report on Sri Lanka, called IMF Country Report-24/161, released after the second review of its four-year financing program for the country.
The report highlights the importance of this tax for boosting government revenue and as part of the overall fiscal strategy.
Sri Lanka aims to fully implement this tax system by 2026.
An imputed rental income tax is based on the estimated income a homeowner would earn if the property were rented out, not on the property’s value.
The IMF stresses that Sri Lanka should create a local government-level database to implement this tax. This database should have updated estimates of all properties owned by individuals in the country.
The report also says this database should be completed by August this year.
The IMF proposed this new tax because of delays in implementing the previously planned property tax and gift and inheritance tax system, which faced various constitutional issues.