Sri Lanka plans to introduce an imputed rental income tax on owner-occupied and vacant residential properties beginning April 1, 2025, as part of its ongoing revenue mobilization efforts, according to reports.
This new tax will reportedly replace the previously scheduled Property Tax for 2025, which encountered institutional delays. The International Monetary Fund (IMF) staff review, following a technical assessment, supported this alternative as a way to sustain the country’s revenue targets.
An imputed rental income tax estimates the income a homeowner could earn if they rented out their property and taxes them on that potential income. This tax is based on the potential income from the property rather than its value.
The IMF has repeatedly stated that Sri Lanka should focus on establishing a data repository at the municipal level to implement this tax system. This repository should include updated estimates of properties owned by residents. (NewsWire)
