A country full of exotic sceneries, multicultural destinations, and extraordinary lands, Sri Lanka quite lives up to the name “Wonder of Asia”. The diverse climate range of Sri Lanka creates a very opportunistic instance for anyone deciding to buy property here, as there is a wide variety of options to select from adhering to your personal preference. If you are a foreigner, selecting the right property to invest in can be quite a hassle. That is why thought to help you navigate through the legal background of property investing in Sri Lanka. 


As introduced above, Sri Lanka can be the home of your dream site depending on any of your liking. From the breezy beachfront, the dewy jungle, and the scorching dry lands to the bustling cityscape, Sri Lanka has it all. The exclusivity of each destination creates a significant demand for property in Sri Lanka. But, the main shortcoming of investors is the limited knowledge on the value of property investments. This helps foreign investors to take rein in property investments.


The main law that helps foreign investors purchase freehold property in Sri Lanka is Land Act no: 38 of 2014. This allows the investor to buy, build, rent, and sell the property while making a considerable amount of profit. The basic procedure under this act states that, when a foreign investor purchases a property in Sri Lanka, they are required to do so through a Sri Lankan company structure. They should also involve a lawyer as a trustee under the company. The investor can totally control the company.

The property purchase is tax-free but the other additions such as a Stamp duty of 4%, capital gain of 10%, and a dividend tax of 10% are added to the expense. The expenses also include company incorporation, trusteeship security, legal setup, and lawyer’s fees.

The Foreign Exchange Act No 12 of 2017 also helps with lesser taxation on the properties of foreign investors to expand liberal exchanges.


Foreign investments in certain areas such as Sri Lankan exports, mining, timber industry, deep-sea fishing, travel and shipping agencies, and freight forwarding will be only approved up to 40% of the stated capital by the Board of Investments in Sri Lanka.

The main thing to note is that when the investment is done through an IIA, it can be easily repatriated into home currency. This can be helpful in capital transactions and profits being exchanged into home currency.


The Land Act of 2014 was amended in 2017 to allow foreign investors to lease land for up to 99 years. This fact is very crucial as it can be advantageous to investors in many ways. Rather than purchasing property, land can be leased in order to get maximum benefits for the investor. This allows them to lease the land without any specific additional tax. It also has a lesser stamp tax than the purchase of the property. Additionally, leasing also gives the foreign investor the ability to repatriate the Sri Lankan Rupee. For any foreigners looking for property in Sri Lanka, leasing is the best and most efficient option as this will cost a lot less and put you through minimum processes.


After learning about the serious legal information, it is important to get some local advice on how to prevent yourself from being swindled while hunting for luxury properties in Sri Lanka. It is very essential as a foreigner to be familiar with all the laws pertaining to property investment as this is the major way how people get tricked into spending massive amounts of bribes. You should never pay any amount of money for any party to work around the law as it is impossible and illegal. got you covered when it comes to connecting you with reliable and experienced property sellers around the country.


The reason for investment can vary from individual to individual, and Sri Lanka has the perfect destination for all possible needs. If you want to get into hospitality with your property, then beaches are the best bet. There are breathtaking remote locations like Kogalla and Aluthgama. World Heritage tourist attractions like Galle, Bentota, and Hikkaduwa. If your taste is a bit wild, Sri Lanka has thick forest areas like Ella, Sinharaja, and Kitulgala. Catering to every need, Sri Lanka can give an investor the best experience of owning a property and the best thing about it is that investing in Sri Lankan property is not that difficult.

The legal side of property investment is not as hard as it looks, after the many incentives provided by the Sri Lankan Government to improve the economy; it is easier than ever to purchase your own safe haven in the Pearl of the Indian Ocean. 

Leave a Reply

Your email address will not be published. Required fields are marked *