Tax
An IMF-driven tax overhaul following the 2022 default
The Inland Revenue Act No. 24 of 2017 governs income tax, but rates and reliefs were substantially rewritten from 2022 onwards as part of the IMF programme following Sri Lanka's sovereign default. Personal thresholds fell sharply and VAT rose. Any figure older than 2023 should be treated as superseded.
Governing law
- Inland Revenue Act, No. 24 of 2017 — Income tax; heavily amended 2022-2024.
- Value Added Tax Act, No. 14 of 2002 — VAT, raised to 18% in 2024.
In practice
Residents are taxed on worldwide income; non-residents on Sri Lanka-source income. Corporate income tax is 30% for most companies, with concessionary rates for specified sectors. VAT is charged at 18% following the 2024 increase, on a registration threshold set by the Commissioner General. Withholding applies to interest, dividends, rent and service fees, with treaty relief available. Rates changed in almost every year from 2022 to 2024 — cite the Act as amended for the specific year of assessment. Sri Lanka has around 45 double tax treaties; residence certification is required to claim relief.