Foreign companies listed on the CSE can acquire, own freehold land
Foreign companies will soon be able to acquire and own freehold land in Sri Lanka as long as the entity is listed on the Colombo Stock Exchange (CSE).
The barrier imposed on land acquisitions done by foreign entities before 01-04-2018 will be removed through amendments to the Land (Restrictions on Alienation) Act No. 38 of 2014 previously amended in 2018.
The Cabinet of Ministers approved the proposal presented by Finance Minister Mangala Samaraweera to revise the 2018 amendments that provide provisions with respect to the land transactions after 01.04.2018.
Accordingly this new amendment, which is with retrospective effect, all foreign companies listed in the CSE can acquire lands on 99-year lease basis thereby permitting such entities to obtain controlling stakes in projects and companies.
Previously foreigners including foreign companies with 50 per cent or over shareholding were allowed to purchase land outright by paying 100 per cent transfer tax in accordance with the 2014 Act enacted during the Rajapaksa regime.
Under the amendment Act of 2018 outright purchase has been prohibited for foreigners and they can only lease land up to even 99 years by paying a lease tax of 15 per cent on the total rent payable for the entire duration of the lease whether it is one year, 33 years or, 99 years.
This clause will remain in the proposed amendments as well, a senior official of the Finance Ministry said, adding that if the foreign company shareholding is increased to 50 per cent or over the ownership of the land will not become null and void under the new bill.
Foreigners are allowed to purchase apartments / condominiums from ground level up, however lands cannot be purchased on freehold and can only be leased up to 99 years.
The condominiums can be purchased provided that, the entire value shall be paid upfront through an inward foreign remittance prior to the completing of the relevant deed of transfer.
Local private firms with majority foreign holdings will be allowed to lease land on a long-term basis.
However, such companies should have invested at least Rs. 250 million excluding the value of land providing employment to at least 150 people, and have maintained this for at least three years, property dealer said.
Any private company with minority foreign ownership can buy or lease property in Sri Lanka. Also a public company with over 50 per cent foreign ownership is now permitted to buy immovable property, they said.