- Brackets updated
migrated from the production database; research reasoning not recorded.
Top income tax
36.0%
Worldwide system
Corporate tax
30.0%
VAT
18.0%
standard rate
Tax residency
183 days
42 tax treaties
Sri Lanka tax profile
Data year: 2026
- Tax system
- Worldwide Residents are taxed on worldwide income under the Inland Revenue Act No. 24 of 2017 (as amended). Non-residents pay tax on Sri Lanka-source income only. Personal relief for residents and non-resident citizens is LKR 1,800,000 per year of assessment from 1 April 2025; it is not available against gains from realising investment assets. Progressive rates apply to taxable income after reliefs. Qualifying foreign service income and foreign-source income received in foreign currency and remitted through a bank are capped at 15%. Companies pay 30% on ordinary profits, with 15% on qualifying export-service and remitted foreign-source profits and 45% on betting, gaming, liquor and tobacco. Social Security Contribution Levy (2.5% on liable turnover) applies alongside VAT for larger businesses.
- Top PIT rate
- 36.0%
- Corporate tax rate
- 30.0%
- VAT
- 18.0%
- Capital gains tax
- 15.0% Gains from realising investment assets are taxed separately from ordinary income. Inland Revenue (Amendment) Act No. 11 of 2026 (certified 3 June 2026) raised the rate from 10% to 15% for realisations on or after that date; earlier disposals in the same year of assessment remain at 10%. Small gains within Third Schedule limits may be exempt. Gains on listed shares on the Colombo Stock Exchange are generally exempt. A principal place of residence can be excluded from investment-asset treatment when ownership and occupancy tests are met. Personal relief does not offset investment-asset gains.
- Social security (employee)
- 8.0%
- Social security (employer)
- 12.0%
- Dividend withholding
- 15.0%
- Interest withholding
- 10.0%
- Royalty withholding
- 14.0%
- Treaty count
- 42
Income tax brackets
Corporate
| Bracket min | Bracket max | Rate |
|---|---|---|
| LKR 0 | and above | 30.0% |
Personal income
| Bracket min | Bracket max | Rate |
|---|---|---|
| LKR 0 | LKR 1,000,000 | 6.0% |
| LKR 1,000,000 | LKR 1,500,000 | 18.0% |
| LKR 1,500,000 | LKR 2,000,000 | 24.0% |
| LKR 2,000,000 | LKR 2,500,000 | 30.0% |
| LKR 2,500,000 | and above | 36.0% |
Tax flags
Digital Services Tax
Tax residency
- Days threshold
- 183 days
- Residency rules
- An individual is resident for a year of assessment if they reside in Sri Lanka, are present in Sri Lanka during the year for 183 days or more in any 12-month period that commences or ends in that year, are a government employee posted abroad whose spouse is abroad, or are employed on a Sri Lankan ship. Someone who becomes resident only under the 183-day rule is treated as resident from the start of that 183-day period; other residents are generally resident for the whole year. Companies are resident if incorporated in Sri Lanka, registered or with a principal office there, or if management and control are exercised in Sri Lanka.
- Exit tax
- No
- CFC rules
- No
Filing information
- Fiscal year
- 04-01 – 03-31
- Filing deadline
- November 30
Sources
- IRD — Tax rates chart (YoA 2025/2026) (accessed Oct 9, 2026) PIT bands on taxable income, personal relief LKR 1.8M, CIT 30%, investment-asset gains, WHT schedule, VAT 18%, foreign remittance concessions
- IRD — Income Tax overview (accessed Oct 9, 2026) Worldwide taxation for residents, personal relief amounts, instalment calendar, Amendment Act No. 11 of 2026
- IRD — Individual return guide (YoA 2025/2026) (accessed Oct 9, 2026) Annexure 7 progressive rates, foreign-source income caps, return filing
- IRD — VAT notice on non-resident digital services (accessed Oct 9, 2026) 18% VAT on digital services via electronic platforms from 1 July 2026, registration thresholds
- PwC Worldwide Tax Summaries — withholding treaty chart (Sri Lanka row) (accessed Oct 9, 2026) Cross-check domestic dividend, interest and royalty WHT against IRD chart
- IRD — Double taxation agreements register (accessed Oct 9, 2026) 42 bilateral DTAs listed as at 1 January 2024
Change history
-
-
- Capital gains tax rate 10 15
- Brackets updated
migrated from the production database; research reasoning not recorded.