Flying over Trinco
For a long time foreigners had to pay 100% tax to buy land in Sri Lanka. For about as long, this tax has been evaded (usually through shell companies). Now the government is planning to abandon the tax altogether, which has pros and cons.
Sri Lanka will scrap the 100% tax on foreigners buying land, to promote foreign investment and tourism. The Government instead plans to introduce a special land tax in the 2012 budget removing existing barriers in the sale of land to foreigners and foreign companies to develop land in any part of the country. This will bring more revenue to government coffers, Finance Ministry sources said.
The new land tax, the amount of which is yet to be finalised, is aimed at preventing the sale of land at inflated prices to foreign buyers, making huge profits completely tax free and thereby cheating the government of revenue while also breaking immigration laws. Whenever there’s a prohibitive tax in place, foreign investors find a way around it and Sri Lanka is no exception, a senior official of the Finance Ministry, said. (Sunday Times)
The usual con is that OMG, foreigners will take over the country. Thing is, this is land. They literally cannot take it out of the country, and if they want to derive profits, they still have to develop the land here. Half the roti stands in Hikkaduwa are foreign owned or funded, though usually through a spouse. Any number of higher end spots are foreign owned, through corporate entities. Yet I must confess, the idea still makes me a bit uncomfortable. For foreign investors or even citizens, land prices are low here and they could quite possible buy stuff up as an investment and not develop it at all.
Pros, well, land will get developed, the government will get revenue, and foreigners can live in and enjoy Sri Lanka. Personally, I think Sri Lanka needs an immigration policy as well, so that people (especially but not exclusively people of SL descent and spouses) can decide to become Sri Lankan if they want. Dunno if the government sees any revenue in that, but there is.