With the enactment of the Inland Revenue (Amendment) Act, No. 2 of 2025, certified on March 25, 2025, Sri Lankan residents earning income from foreign sources are now required to pay income tax on the gains and profits derived from such income. This applies to income remitted through a bank in foreign currency, and marks a significant shift in the country’s approach to taxing cross-border earnings.

The first quarterly payment for the 2025/26 year of assessment is due on August 15, 2025.

Who is affected?

This requirement applies to Sri Lankan tax residents receiving income from foreign sources, including:

• YouTubers and digital content creators
• Freelancers and consultants serving international clients
• Remote employees of overseas companies
• Affiliate marketers and digital service providers

If you earn income from abroad and remit it through formal banking channels in foreign currency, it is now subject to income tax at a rate of 15%.

Key tax deadlines for 2025/26

Taxpayers are required to make quarterly self-assessed payments for the 2025/26 year of assessment by the following dates:

• 1st Quarter – August 15, 2025
• 2nd Quarter – November 15, 2025
• 3rd Quarter – February 15, 2026
• 4th Quarter – May 15, 2026

The final tax payment must be made by September 30, 2026, and the annual tax return must be filed by November 30, 2026.

Also don’t forget: 2024/25 Deadlines are also nearing

While the new law applies from April 1, 2025, it’s important to note that for the 2024/25 year of assessment, the final tax payment is due by September 30, 2025, and the tax return must be filed by November 30, 2025. Individuals who earned foreign income in the prior year should ensure timely compliance with the applicable rules.

What Should You Do Next?

With Sri Lanka formalising its tax treatment of foreign-sourced income, individuals earning online or overseas must now:

• Confirm whether their income is taxable under the amended Act
• Ensure remittance is made through licensed banks in foreign currency
• Track all foreign income and retain documentation
• Monitor and meet quarterly and annual tax deadlines

Proactive planning is key to avoiding penalties and ensuring smooth compliance. If you need help understanding your obligations or calculating your tax exposure, we’re available for a free consultation to help you navigate the process confidently.