Sri Lanka taxes its residents on worldwide income, but with a twist that rewards using its banks. Foreign-source income that's earned in foreign currency and remitted to Sri Lanka through a bank is taxed at no more than 15%. Leave the same income abroad and it's taxed at the normal rates, up to 36%.
This guide covers Sri Lankan personal tax for people moving there in the 2026/27 year of assessment: the 15% rule, the 183-day test, rates, EPF, crypto and visas.
The key question is simple. Is your income earned abroad in foreign currency, and does it reach you through a Sri Lankan bank?
What's changed: since 1 April 2025, remitted foreign income and service exports are taxed at up to 15% instead of being exempt, and the personal relief is LKR 1.8 million. The Inland Revenue (Amendment) Act No. 11 of 2026, certified on 3 June 2026, raised the tax on individuals' investment asset gains from 10% to 15% from that date, made investor visa holders non-resident from 2025/26 and dropped the statement of estimated tax.
π Sri Lanka tax at a glance for 2026/27
Topic | Details |
|---|---|
Tax year | Year of assessment from 1 April to 31 March. 2026/27 runs from 1 April 2026 to 31 March 2027 |
Tax system | Worldwide income for residents. Non-residents are taxed only on Sri Lankan income |
Top income tax rate | 36% on taxable income above LKR 2.5 million, after a LKR 1.8 million personal relief |
Foreign income remitted | 15% at most, if earned in foreign currency and remitted through a bank to Sri Lanka |
All-in on a US$100k salary | About 41% from a Sri Lankan employer, including 8% EPF. About 14% working remotely for an employer abroad |
Capital gains | 15% on gains from investment assets from 3 June 2026 (10% before) |
Dividends and interest | 15% final withholding tax on Sri Lankan dividends. 10% withholding on interest, credited against your tax |
Social security | EPF: 8% from employees and 12% from employers, foreign employees included. Nothing compulsory for the self-employed |
Residence at a glance | Getting in: moderate (you reside in Sri Lanka, or 183 days in any 12-month period that starts or ends in the year). Leaving: moderate, with a deemed sale of your foreign assets when you stop being resident |
Double tax treaties | 43 comprehensive agreements, including the UK, the US, India, Singapore, Australia and Germany |
US dollar figures use about LKR 330 to US$1 (the US Federal Reserve's rate was LKR 330.80 on 9 October 2026).
The 15% rule for foreign income
Why does the route your money takes matter so much in Sri Lanka? Because the 15% cap only applies to income that arrives the right way.
Image 1 β bring foreign income in through a bank and the rate stops at 15%
For a resident individual, these are taxed at a maximum rate of 15%:
Service exports: gains and profits from a service you provide, in or outside Sri Lanka, to someone who uses it outside Sri Lanka, where you're paid in foreign currency and the payment is remitted through a bank to Sri Lanka.
Foreign-source income: gains and profits from any foreign source, earned in foreign currency and remitted through a bank to Sri Lanka.
Where you do the work doesn't matter. A developer in Colombo billing a London client qualifies, and so does a remote employee of a company with no presence in Sri Lanka. The Inland Revenue Department's payroll table for remote employees takes off the LKR 1.8 million relief, then charges 6% on the next LKR 1 million and 15% on the rest.
Income kept abroad, income paid in rupees, and anything from Sri Lankan clients or employers doesn't qualify. As a resident, you're still taxed on foreign income you don't remit, at the normal rates up to 36%.
The investor visa: not resident at all
The 2026 amending Act added a rule that goes further. An individual holding an Investor Category Residence Visa isn't resident in Sri Lanka for income tax for that year of assessment, from 2025/26. As a non-resident, you're taxed only on income from Sri Lanka, so a foreign pension or portfolio falls outside Sri Lankan tax.
The visa needs US$100,000 invested in Sri Lanka for five years, or US$200,000 for ten, in term deposits, long-dated government securities, property or at least 10% of a Sri Lankan company. The rule is new, so take advice before relying on it.
When you become tax resident in Sri Lanka
Residence is decided for each year of assessment, from 1 April to 31 March. You're resident for a year if either of these applies:
you reside in Sri Lanka, or
you're present in Sri Lanka for 183 days or more in total in any 12-month period that starts or ends during the year.
The 12-month window doesn't follow the tax year, so 183 days spread across December to June can make you resident in both years. If you're resident only because of the 183 days, you're resident from the start of that 183-day period. Otherwise, you're resident for the whole year.
When you become resident, your foreign assets are treated as acquired at market value, so gains made before you arrived aren't taxed later.
How you stop being resident
You stop being resident once you no longer reside in Sri Lanka and have no 12-month period with 183 days that starts or ends in the year. Because the window looks back, the year you leave is often still a resident year, and a resident year counts in full.
There's one exception. If you leave Sri Lanka to work abroad under a contract of at least one year, for an employer not associated with your Sri Lankan employer, you're not resident from the first day of that year of assessment until the contract ends.
Watch the exit charge. When you stop being resident, the Act treats you as having sold all your assets, other than Sri Lankan assets, at market value just before you leave, so gains built up while you lived there can be taxed.
π Inland Revenue Department: income tax for residents and non-residents
Income tax rates for 2026/27
Residents, and non-resident Sri Lankan citizens, get a personal relief of LKR 1.8 million a year. The relief can't be set against gains from investment assets. The rest of your taxable income is taxed on this scale:
Sri Lanka income tax rates for 2026/27 (individuals)
Taxable income, after relief | Rate |
|---|---|
First LKR 1,000,000 | 6% |
Next LKR 500,000 | 18% |
Next LKR 500,000 | 24% |
Next LKR 500,000 | 30% |
Over LKR 2,500,000 | 36% |
Source: Inland Revenue Act No. 24 of 2017, First Schedule paragraph 1, as amended by Act No. 2 of 2025, for years of assessment from 1 April 2025. Qualifying foreign income is capped at 15%.
Employers deduct tax from salaries each month under Advance Personal Income Tax (APIT).
Worked example
You're resident in Sri Lanka for 2026/27 and earn LKR 33 million (about US$100k) from a Sri Lankan employer.
After the LKR 1.8 million personal relief, your taxable income is LKR 31.2 million.
Tax is LKR 420,000 on the first LKR 2.5 million, plus 36% of the remaining LKR 28.7 million: LKR 10.75 million in total, or 33%.
EPF takes 8% of your earnings, another LKR 2.64 million. The all-in cost is about LKR 13.4 million, or 41%.
Now suppose the same LKR 33 million comes from an employer with no presence in Sri Lanka, paid in US dollars into a Sri Lankan bank. Tax is 15% of LKR 33 million less LKR 360,000: LKR 4.59 million, or 14%.
π Inland Revenue Department: tax chart (rates, personal relief, withholding rates)
π Inland Revenue Department: APIT Tax Table 8 (remote employees of foreign employers)
Freelancing in Sri Lanka
Freelance profit is business income, taxed on the same scale after the personal relief. The difference is the 15% cap: fees from clients outside Sri Lanka, paid in foreign currency and remitted through a bank, count as service exports. On US$100k of such fees you'd pay about 14%.
Keep the fees abroad, or take them in rupees, and the normal rates apply: about 33% on the same profit. Fees from Sri Lankan clients are always taxed at the normal rates, and from 3 June 2026 local payers deduct 5% from monthly service fees over LKR 100,000 paid to resident individuals in a wider list of professions.
There are no compulsory social security contributions for the self-employed. You pay tax in quarterly instalments and file a return.
Crypto, investments and pensions
How is crypto taxed in Sri Lanka? There are no crypto-specific rules, though you must declare virtual assets in the statement of assets filed with your return. A gain on crypto held as an investment is likely to be taxed as an investment asset gain at 15%, and trading profits at the normal rates up to 36%. Neither point has official guidance yet.
Other investments are taxed like this for residents in 2026/27:
Gains from investment assets: 15% from 3 June 2026, 10% before. The personal relief doesn't apply. Gains on shares quoted on a licensed stock exchange, and on your main home if conditions are met, are exempt.
Dividends: dividends from Sri Lankan companies carry a 15% final withholding tax, with nothing more to pay. Foreign dividends remitted through a bank in foreign currency are taxed at 15% at most.
Interest: banks deduct 10%, which counts towards your tax bill. Residents with no taxable income can file a self-declaration to be paid gross.
Pensions: pensions paid by the Government of Sri Lanka are exempt. A foreign pension is foreign-source income, so remitting it through a bank in foreign currency should keep it within the 15% cap.
There's no inheritance tax or wealth tax: neither is among the taxes the Inland Revenue Department administers.
Social security: EPF
The Employees' Provident Fund (EPF) is Sri Lanka's main scheme for private sector employees, and the Department of Labour says it covers foreign employees working in Sri Lanka too:
you pay 8% of your total monthly earnings, deducted from your salary
your employer pays 12%, making 20% in total
earnings include salary, fees and cost of living allowances, but not overtime or bonuses
Employers also pay into the Employees' Trust Fund (ETF). The self-employed aren't covered by EPF, but can join the ETF voluntarily.
π Employees' Provident Fund (Central Bank of Sri Lanka): FAQs for employers on contribution rates
π Department of Labour: EPF eligibility, including foreign employees
π Employees' Trust Fund Board: membership for employees and the self-employed
Double tax treaties
Does Sri Lanka have double tax treaties? Yes. The Inland Revenue Department lists 43 comprehensive double tax avoidance agreements, plus limited agreements with Hong Kong, Jordan, Saudi Arabia and the UAE. Partners include the UK, the United States, India, Singapore, Australia, Germany, Japan and the UAE.
If you're resident in two countries, the treaty's tie-breaker decides where you're treated as resident. Foreign tax paid can be credited, up to the Sri Lankan tax on that income.
π Inland Revenue Department: double tax avoidance agreements
Visas: a digital nomad visa and an investor visa
The Department of Immigration and Emigration offers a Digital Nomad residence visa. These are the main routes for a longer stay:
Sri Lanka residence visa routes in 2026
Visa | Who it's for | Main conditions |
|---|---|---|
Digital Nomad | Remote workers, freelancers and business owners whose clients and business are outside Sri Lanka | Remit at least US$2,000 a month. One year, renewable. US$500 a year each. International health insurance. No local employment |
Investor | People investing in Sri Lanka | US$100,000 for a five-year visa, or US$200,000 for ten years. Holders aren't tax resident |
My Dream Home | Senior foreign nationals who already hold this visa (extensions only, no new applications) | Remit US$1,500 a month and keep US$15,000 in a fixed deposit. Two years, renewable. No paid or unpaid work |
Employment | Employees of Sri Lankan companies, BOI projects and banks | One year, or as recommended, renewable each year |
On the nomad visa you'll usually be tax resident after 183 days, but the income you remit should fall within the 15% cap. Renewal needs proof of tax registration with the Inland Revenue Department.
π Department of Immigration and Emigration: Digital Nomad visa category
π Department of Immigration and Emigration: investor visa guidelines
π Department of Immigration and Emigration: My Dream Home visa
π Department of Immigration and Emigration: residence visa categories
Who is Sri Lanka good for?
How does Sri Lanka compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on the 2026/27 year of assessment and the all-in cost including EPF. The freelancer, retiree and investment figures assume your foreign income is paid in foreign currency and remitted through a bank. The Retirees and Investment income ratings count the investor visa, which takes you out of tax residence.
βοΈ Who is Sri Lanka good for? Tax ratings for expats in 2026
Expat profile | Sri Lanka rating | Why |
|---|---|---|
Employees | Poor | About 41% all-in on a US$100k salary (LKR 33m) from a Sri Lankan employer: 33% income tax plus 8% EPF. About 14% working remotely for an employer abroad, with pay remitted through a bank. |
Freelancers (self-employed) | Good | About 14% on US$100k of fees from clients abroad, paid in foreign currency and remitted through a Sri Lankan bank, with no compulsory contributions. Fees kept abroad, or from local clients: about 33%. |
Retirees | Excellent | 0% on a US$40k foreign pension plus US$20k of foreign investment income with an investor visa (from US$100,000 invested), because holders aren't tax resident. Without one, about 13% if you remit it. No inheritance or wealth tax. |
Crypto gains | Good | No crypto-specific rules. A gain on crypto held as an investment would most likely be taxed as an investment asset gain at 15%. If it amounts to trading, the profit is taxed at the normal rates of up to 36%. |
Investment income | Excellent | A foreign portfolio is outside Sri Lankan tax for investor visa holders. Otherwise about 14% on the US$1m portfolio, with remitted income and gains both at 15% at most. |
Digital nomad visa | Good | A Digital Nomad visa for remote workers and freelancers with foreign clients, remitting US$2,000 a month. One year, renewable. You're taxed normally once resident. |
Filing and deadlines
The year of assessment runs from 1 April to 31 March. For 2026/27:
Quarterly instalments: 15 August 2026, 15 November 2026, 15 February 2027 and 15 May 2027. From 2026/27 they're based on your tax for the previous year, and the statement of estimated tax has been dropped.
Final payment: 30 September 2027.
Return of income: filed online by 30 November 2027.
Payroll tax: employers pay over APIT by the 15th of the following month.
If your only income is employment income fully taxed through APIT, with bank interest of up to LKR 5,000, you don't need to file a return, unless the Department has opened a tax file for you. Freelancers and anyone with foreign income should register for a Taxpayer Identification Number (TIN).
π Inland Revenue Department: tax calendar 2026
Frequently asked questions
Is foreign income taxed in Sri Lanka?
Yes, if you're resident. Foreign-source income earned in foreign currency and remitted to Sri Lanka through a bank is taxed at no more than 15%. Foreign income you leave abroad is taxed at the normal rates, up to 36%.
How many days make you tax resident in Sri Lanka?
You're resident for a year of assessment if you reside in Sri Lanka, or if you're there for 183 days or more in any 12-month period that starts or ends in that year. The year runs from 1 April to 31 March.
What are the income tax rates in Sri Lanka for 2026/27?
After a LKR 1.8 million personal relief, rates run from 6% on the first LKR 1 million to 36% above LKR 2.5 million. Investment asset gains are taxed at 15% from 3 June 2026.
Does Sri Lanka have a digital nomad visa?
Yes. It's for remote workers and freelancers with clients outside Sri Lanka who remit at least US$2,000 a month. It lasts a year, is renewable and costs US$500 a year.
Do investor visa holders pay tax in Sri Lanka?
From 2025/26, an individual holding an Investor Category Residence Visa isn't resident for income tax, so only Sri Lankan income is taxed. The visa needs US$100,000 invested in Sri Lanka for five years, or US$200,000 for ten.
Do foreigners pay EPF in Sri Lanka?
Usually, if they work for a Sri Lankan employer. Employees pay 8% of their total monthly earnings and employers pay 12%. The self-employed aren't covered, though they can join the Employees' Trust Fund voluntarily.
Where to go next
π Best countries for retirees
π Best countries for investors
π Best countries for entrepreneurs
π Hardest countries to stop being tax resident
π Special tax regimes for new residents
Important information
This article is general information and does not constitute tax, legal, immigration or financial advice, and does not create a client relationship. Tax outcomes depend on travel history, income sources, treaty status and the law applying to the relevant year. Rates, thresholds and regimes change, and some measures described may be proposed rather than enacted; this article reflects our understanding as at the date of publication. Obtain advice from a suitably qualified professional before acting or refraining from action.
