A property tax on houses proposed under Sri Lanka’s International Monetary Fund (IMF) program has been deferred for another year, President Anura Kumara Dissanayake told a public rally in Gampaha on Sunday.
Dissanayake said the tax would have fallen on houses built with the savings of people who had already paid tax on their earnings.
He said that in the run-up to the elections, there had been fearmongering that a National People’s Power (NPP) Government would take away people’s second houses.
‘Even at that time, there was an agreement that there would be a property tax. We are now presenting the third Budget, and there is still no property tax,’ Dissanayake said.
‘Our argument is that property is built by saving earnings that have already been taxed. So that person has paid taxes for the property. On that basis, we have deferred the property tax,’ he said.
The IMF’s Second Review of Sri Lanka’s Extended Fund Facility (EFF), published in June 2024, proposed an imputed rental income tax on owner-occupied and vacant residential properties, replacing a nationwide property tax originally envisioned under the program.
The tax was expected to be implemented before the start of the tax year in April 2025. An imputed rental income tax is levied on the rent a homeowner could earn if the property were let out, rather than on income actually received.
In December 2024, Dissanayake told Parliament the Government had begun talks with the IMF on the program’s Third Review, addressing preconditions agreed by the previous administration, including a property tax based on imputed income. However, the property tax was left out of subsequent Budgets since then.