🧾 Taxes & Legal
Protecting your residency and assets. A guide to the legal framework of living in Kandy as a foreigner in 2026.
Tax for Digital Nomads
As of 2026, Sri Lanka has specific incentives for remote workers. If you are on the **Digital Nomad Visa**, you are generally exempt from income tax on earnings derived from *outside* Sri Lanka.
Personal Income Tax (PIT)
Tax residents (staying >183 days) are taxed on worldwide income *unless* covered by nomad exemptions or Double Taxation Treaties.
VAT & SSCL
Most goods and services include 18% VAT + 2.5% SSCL. When buying big-ticket items in Kandy (furniture, electronics), always ask for a VAT invoice.
Residency Finance
Holding your visa requires more than just a stamp. It requires financial proof.
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$2,000/mo minimum income proof for Nomads -
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Local health insurance is now mandatory for renewal -
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Security clearance is required for 1-year+ stays
Housing & Property Law
Stamp Duty
Lease agreements longer than 1 year require a 1% stamp duty payment. Ensure your landlord handles this legally.
Withholding Tax
If you rent a commercial space in Kandy for business, you may be required to withhold 10% tax from the rent.
Land Ownership
Foreigners cannot own land directly. Condos (above the 4th floor) are the only “Castle” you can truly own 100%.
Common Legal Pitfalls 🚩
1. The “Informal” Lease Agreement
High Risk
Landlords in Kandy may suggest a “handshake” deal to avoid taxes. Without a notarized agreement, you have zero protection if the price is hiked or you are evicted early.
2. Working on a Tourist Visa
Medium Risk
While common, it is technically illegal. If you are seen as “taking a local job,” you risk deportation. Stick to the Nomad Visa for remote work security.
3. Ignoring Municipal Rates
Low Risk
Check if your rent includes “Municipal Assessment Tax.” If not, verify who pays it to avoid service cuts to your property.
Need a Lawyer in Kandy?
We have vetted 3 local firms that specialize in expat property law and visa appeals.