Sri Lankans abroad buying ‘homeland’ bonds to get land tax break

Nov 07, 2007 (LBO) – Foreign resident Sri Lankans who will buy a special bond would be allowed to buy land in the country without a penal 100 percent transfer tax, President Mahinda Rajapakse said. The bond to be called ‘Homeland Development Bond’ would have maturities from 1 to 5 years and would be sold through Sri Lankan banks.

“I propose that the 100 percent property tax applicable to non-residents in the purchase of land will not apply to those who invest in these bonds and that interest arising from such bonds will also be exempt from income tax,” Rajapakse told parliament in his budget speech.

Sri Lanka imposed a tax on non-resident who bought property after a new government came to power in April 2004.

However companies incorporated in Sri Lanka with foreign shareholders had been able to buy up land.

The tax was brought largely due to pressure from the Marxist – Nationalist Janatha Vimukthi Peramuna which wanted to stop foreigners buying land in the southern coastal belt.

Sri Lanka has previously tried to issue bonds to foreign residents called ‘Nation Building Bonds’ sweetened with a tax free car. However the take-up was not encouraging.

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