Feb 11, Colombo: The Sri Lankan government has decided to impose a transfer tax on leases of land to non-citizens.

The Cabinet has approved a proposal made by the President in his capacity as the Finance Minister to amend the Finance Act No 11 of 1963 to make leases to non-citizens to be liable for the payment of transfer tax.

The measure was taken to prevent the non-citizens from circumventing the payment of the transfer tax by entering into long-term lease arrangements with the local land owners.

The present legal provisions warrant the levy of a tax equivalent to the value of the related property, when a property is transferred to a non-citizen, but, according to the government foreigners avoid paying the tax by leasing the land for a long term from the owners.

The government says it loses the revenue and also the foreigners get long term possession of valuable land at a minimal value.