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Transfer of title of property to foreigners
a) A foreigner
b) A company incorporated in Sri Lanka where the foreign shareholding, either direct or indirect, is 50% or above
c) A foreign company
Restrictions with regard to companies with foreign ownership
To maintain legal validity of a transfer of land to a company incorporated in Sri Lanka with less than fifty per cent of foreign shareholding, the foreign shareholding of such company shall remain less than fifty per cent, for a minimum period of consecutive twenty (20) years from the date of such transfer.
If the foreign shareholding reaches or exceeds fifty per cent of the company consequent to,
Change of ownership of shares directly or indirectly
Death of a shareholder of such a company and the shares of the deceased shareholder devolving (in accordance with the applicable laws of succession of Sri Lanka) on his next of kin who is a foreigner
If so, the transfer of land shall be void and shall have no effect in law from the date of increase of the foreign shareholding.
Restrictions with regard to companies with foreign ownership
To maintain legal validity of a transfer of land to a company incorporated in Sri Lanka with less than fifty per cent of foreign shareholding, the foreign shareholding of such company shall remain less than fifty per cent, for a minimum period of consecutive twenty (20) years from the date of such transfer.
Time period for rectification
Unlisted companies should take steps to reduce the foreign shareholding to less than fifty per cent within a period of 6 months from the date of increase of its foreign shareholding
Listed companies should take steps to reduce the shareholding to less than fifty per cent within a period of 12 months from the date of increase of its foreign shareholding
The transfer of land will be deemed legally valid with effect from the date of restoring the foreign shareholding to less than fifty per cent.
Restrictions with regard to companies with foreign ownership
To maintain legal validity of a transfer of land to a company incorporated in Sri Lanka with less than fifty per cent of foreign shareholding, the foreign shareholding of such company shall remain less than fifty per cent, for a minimum period of consecutive twenty (20) years from the date of such transfer.
Restrictions on the transfer of title of any Land to foreigners will not apply to;
Where any land the title of which is transferred to;
A Diplomatic mission of any other state.
A condominium parcel situated on or above the 4 th floor of a building specified under the Apartment Ownership Law, (excluding the ground level floor and floors which accommodate only common elements within the meaning of the Apartment Ownership Law) provided that the entire value was paid upfront through inward foreign remittance prior to the relevant deed of transfer.
A foreign investor in consequence to a decision of the cabinet taken prior to 1/1/2013 involving direct investment of foreign currency. As per tax regime prior to 1/1/2013
Transferred by intestacy, gift or testamentary disposition to a next of kin (foreigner) of the owner.
A dual citizen of Sri Lanka within the meaning of the Citizenship Act.
Any bank licensed under the Banking Act in which any foreign shareholding is fifty per cent or above fifty percent.
Any finance leasing institution, in which foreign shareholding is fifty per cent or above fifty percent.
To any company incorporated in Sri Lanka within 1/1/2013 and 1/1/2014, provided the company has been in operation in Sri Lanka 10 years or more.
Any foreign entity identified as a strategic development project and engaged in banking, finance, insurance, maritime, aviation, and advanced technology or in infrastructure projects.
Any foreign company engaged in international commercial operations where the land is purchased to locate or relocate its global or regional operations or to set up a branch office.
On transfer of land to next of kin (foreign citizen)
The transfer of a title of a land to a next of kin (who is a foreign citizen), shall be registered by the Registrar of Lands, where the notary public attesting such instrument of transfer certifies in his attestation that the transferee is the next of kin of the owner of the land transferred, as recognized by the applicable laws of succession of Sri Lanka.
Where any question arises whether a person is next of kin of the owner of the land, the Registrar of Lands shall refer the matter to the District Court having jurisdiction over the area in which the relevant land is situated, for a determination through summary proceeding.
Company Secretarial role on the transfer of land to a company incorporated in Sri Lanka (under the Companies Act)
Where the title of a land is transferred to a company incorporated in Sri Lanka under the Companies Act, with less than fifty per cent of foreign shareholding, it is the duty of the Registrar of Lands to obtain confirmation whether the foreign shareholding of such a company is less than fifty per cent, by requiring the Secretary of such company to submit documentary proof.
The Secretary of the relevant company shall inform the Registrar of Lands in writing every six months period commencing from the date of registration of the relevant deed of transfer that the foreign shareholding of such company has not exceeded fifty per cent of the total number of shares issued by the company, during the said period of six months.
Where the foreign shareholding of the relevant company exceeds fifty per cent, the relevant Registrar of Land shall make a note to that effect in the relevant folio.
Stamp Duty applicable when acquiring immovable properties
In terms of the Stamp Duty (Special Provisions) Act;
i. where the value of the property is Rs.100,000/- or less For every Rs.100/- or part thereof of the value 3.00
ii. where the value of the property exceeds Rs.100,000/- For every Rs.100/- of the value not exceeding Rs.100, 000/- 3.00 And For every Rs.100/- or part thereof of the value exceeding Rs.100, 000/-
Restrictions on the leasing of lands to foreigners in Sri Lanka
In 2017 via the Amendment Act, No. 3 of 2017, the law on the Land Lease Tax was removed stating that the provisions relating to the tax payable shall not apply to a lease of land to a foreigner, company incorporated in Sri Lanka where foreign shareholding, either direct or indirect is fifty per cent or above or to a foreign company under an agreement executed on or after January 8 th , 2017 and therefore after the said date the tax shall not be charged from any such person or company.
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