SRI LANKA TAX REPORT 2025 / 2026

Sri Lanka implemented significant tax reforms effective April 1, 2025. This report outlines the current rates and obligations for the 2025/2026 Year of Assessment.

PERSONAL INCOME TAX (APIT)

The government increased the tax-free allowance. You now have a relief of Rs 1,800,000 per annum (Rs 150,000 per month).

Tax Slabs (Effective April 1, 2025)

• First Rs 1,800,000: 0% (Tax-Free)

• Next Rs 1,000,000: 6%

• Next Rs 500,000: 18%

• Next Rs 500,000: 24%

• Next Rs 500,000: 30%

• Balance: 36%

CORPORATE INCOME TAX (CIT)

Standard rates remain high. Specific sectors face new adjustments.

• Standard Rate: 30%

• Export of Services & Goods: 15% (Reduced from 30%)

• Betting, Gaming, Liquor, Tobacco: 45% (Increased from 40%)

VALUE ADDED TAX (VAT)

The standard VAT rate remains at 18%.

• Standard Rate: 18%

• Registration Threshold: Rs 60,000,000 per annum (Rs 15,000,000 per quarter)

• Digital Services: 18% VAT on cross-border digital services begins April 1, 2026.

WITHHOLDING TAX (AIT / WHT)

Deductions at the source apply to specific payments.

• Interest Income: 10% (Increased from 5%)

• Rent (Residents): 10% (On payments exceeding Rs 100,000/month)

• Professional Fees (Residents): 5% (On payments exceeding Rs 100,000/month)

• Dividends: 15%

• Payments to Non-Residents: 14% (General rate)

SOCIAL SECURITY CONTRIBUTION LEVY (SSCL)

This turnover-based tax applies to importers, manufacturers, and service providers.

• Rate: 2.5%

• Threshold: Rs 60,000,000 per annum

IMPUTED RENTAL INCOME TAX

The government proposed a wealth tax on property. This tax targets high-value property owners. Details regarding rates and thresholds remain pending as of February 2026.

COMPLIANCE DEADLINES

Adhere to these dates to avoid penalties.

• Personal Tax Return: November 30

• Corporate Tax Return: November 30

• VAT Return: 20th of the following month

• WHT / AIT Payment: 15th of the following month