The International Monetary Fund (IMF) has proposed the introduction of an imputed rental income tax on owner-occupied and vacant residential properties in Sri Lanka, to be implemented by April 1, 2025.
This recommendation comes as part of the IMF’s latest report on Sri Lanka, highlighting the need for sustained revenue mobilization efforts amid institutional challenges that hindered the initially planned property tax for 2025.
The IMF report emphasizes the importance of establishing a comprehensive property valuation database by August 2024, which will include assessed values, the latest assessment dates, and property types for all municipal councils.
This database is a crucial step towards the effective implementation of the new tax.
Additionally, the report calls for the full operationalization of a nationwide digital Sales Price and Rents Register (SPRR) by the end of March 2025.
This register will be accessible by the Inland Revenue Department (IRD), the valuation department, the land registry, and the public, serving as a key resource for assessing property values and the imputed rental income tax.
The IMF recognizes ongoing vulnerabilities and uncertainties in Sri Lanka, particularly concerning debt restructuring and the upcoming elections.
The IMF directors have urged Sri Lankan authorities to continue strengthening macroeconomic policies to restore economic stability and debt sustainability while maintaining the momentum of reforms to promote long-term inclusive growth.
In support of Sri Lanka’s economic policies and reforms, the IMF Executive Board has completed the 2024 Article IV Consultation and Second Review under the 48-month Extended Fund Facility.
This completion provides Sri Lanka with immediate access to SDR 254 million (approximately USD 336 million).
Moreover, the IMF has highlighted the importance of enacting the Asset Recovery Bill, following necessary public consultations, by November 2024. This bill is expected to play a significant role in enhancing fiscal responsibility and transparency within the country.
