New Tax Rule for Foreign Income Earners in Sri Lanka – What You Need to Know
Isuru Udantha | Mar 1, 2025
If you earn in foreign currency and bring your money to Sri Lanka, you’re required to pay a 15% income tax on it with effect from February 1, 2025. Until now, service providers working for foreign clients enjoyed a tax exemption. But with the latest changes, that exemption is gone.
What Does This Mean for You?
- If you offer services to clients abroad, to be utilized outside Sri Lanka, and payment for such services is received in foreign currency and remitted to Sri Lanka through a bank, you will be taxed as below.
| Companies | Individuals |
|---|---|
| Your profit will now be taxed at 15% with effect from the financial year 2025/26. | Your profit will now be taxed at progressive rates up to a maximum of 15% with effect from the financial year 2025/26. |
| Currently the standard corporate income tax rate for companies is 30%. | Here you can enjoy the personal tax free allowance of LKR 1,800,000 per year. And your next LKR 1,000,000 will be taxed at 6%. Only the balance will be taxed at 15%. |
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This tax change applies to all individuals and businesses in IT, freelancing, BPO, KPO, and other service sectors.
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The tax is only on profits—not on the total amount you receive.
Try Our Foreign Income Tax Calculator
We’ve made it simple for you to check how much tax you’ll need to pay. Just:
- Enter your monthly income in foreign currency.
- Enter the exchange rate.
- Get an instant tax estimate
This new tax rule is effective from February 1, 2025.
Foreign Income Tax Calculator
Important
- This calculator assumes you do not have any other sources of income or qualifying payments for easy understanding.
- The proposed personal relief of LKR 1,800,000 per year (LKR 150,000 per month) is considered.
If you have a mix of local and foreign income sources, Call us at +94 77 106 6548 for assistance!