Cryptocurrency tax in Sri Lanka: how the Inland Revenue Act applies, how to declare crypto income, and what to watch for

Last verified against the primary sources on 15 October 2026.

Take a hypothetical software developer in Colombo who earns 2.5 BTC over the year from freelance work paid in cryptocurrency. At the time of each receipt, the BTC is worth about LKR 45 million in total. Under the Inland Revenue Act No. 24 of 2017, this is assessable income, the same as if the developer had been paid in LKR or USD [1]. The fact that the payment arrived in Bitcoin does not change the tax treatment.

Sri Lanka does not have a standalone cryptocurrency tax law, and the Inland Revenue Act has no separate category for crypto. That does not mean crypto is tax-free. The Act is drafted broadly enough to catch income from any source, in any form, and the IRD can assess tax on any gain that falls within the statutory definition of income [1]. Check ird.gov.lk for any later circular on digital assets before you file.

This guide explains how the existing provisions apply to common crypto activities, what triggers a tax event, how to calculate the gain, and how to report it in your RAMIS return. The treatment is our reading of the general rules, not an IRD ruling.

The legal position: no exemption means it is taxable

The Inland Revenue Act No. 24 of 2017 defines income broadly. Section 2 states that income tax is payable on the assessable income of every person for every year of assessment [1]. The Act does not require income to be in a specific currency or form. If you receive something of value, whether LKR, USD, shares, or cryptocurrency, it is income if it falls within any of the income source categories.

The key categories relevant to crypto are:

• Employment income: if your employer pays part of your salary in crypto
• Business income: if you trade crypto as a business activity (frequent trading, running an exchange, mining as a business)
• Investment income: gains from disposing of crypto held as an investment (capital gains treatment)
• Other income: staking rewards, airdrops, DeFi yields, and other receipts that do not fit neatly into the above categories

Where digital assets arise from trading activity, consider the wider tax records for an online business as well as the asset disposal.

What triggers a tax event

Not every crypto transaction creates a tax liability. The following events typically trigger a taxable moment:

Disposal (selling crypto for fiat)

When you sell BTC, ETH, or any other cryptocurrency for LKR or any fiat currency, the gain (sale price minus cost basis) is assessable income. This is the most straightforward case.

Crypto-to-crypto swaps

Swapping one cryptocurrency for another (for example, BTC to ETH) is a disposal of the first asset and an acquisition of the second. The gain on the disposed asset is taxable at the LKR market value at the time of the swap.

Receiving crypto as payment

If you receive crypto in exchange for goods or services, the LKR value at the time of receipt is your income. This applies to freelancers, consultants, and any business that accepts crypto payments.

Mining and staking rewards

Mining income and staking rewards are taxable when received. The LKR value at the time the reward is credited to your wallet is the assessable amount. If you later sell the mined or staked crypto, any further gain is a separate taxable event.

Airdrops and hard forks

Free tokens received through airdrops or hard forks are generally taxable at their LKR market value on the date of receipt, provided they have a determinable market value.

Non-taxable events

• Transferring crypto between your own wallets (no change of ownership)
• Buying crypto with LKR (acquisition, not disposal)
• Holding crypto without disposing (unrealised gains are not taxed)

How to calculate the gain

The gain is calculated as:

Gain = Disposal proceeds (LKR) − Cost basis (LKR)

Cost basis is the LKR value of the crypto at the time you acquired it, plus any directly attributable transaction costs (exchange fees, gas fees, transfer fees).

Disposal proceeds is the LKR value received at the time of disposal.

If you acquired the same token at different times and prices, you need a method to determine which units you are disposing of. The Act does not specify FIFO, LIFO, or average cost for crypto. Choose one method, apply it consistently to every disposal, and record the method with your working.

Tax rates applied to crypto

Crypto income is taxed at the same rates as other income:

For individuals (progressive rates from 1 April 2025) [2]:

• First LKR 1,800,000: personal relief
• Next LKR 1,000,000: 6%
• Next LKR 500,000: 18%
• Next LKR 500,000: 24%
• Next LKR 500,000: 30%
• Balance: 36%

For companies: 30% standard corporate income tax rate [3].

If the crypto activity constitutes a business (frequent trading), the gains are business income. If the crypto is held as a long-term investment, the gain may be treated as a gain on an investment asset. Such gains are taxed at a flat rate, 15% for individuals from 3 June 2026 (10% before) and 30% for companies [4] [1], and reported in a separate capital gains tax return within 30 days after the end of the month of sale [1]. See our capital gains tax guide.

How to report crypto in your RAMIS return

1. Track every transaction. Maintain a ledger of all acquisitions, disposals, and receipts with dates, LKR values, and counterparty details.
2. Calculate gains for the year. Sum all disposal gains and income receipts for the year of assessment (1 April to 31 March).
3. Include them in your income tax return. Report the total crypto income in the appropriate income category on your RAMIS return, and any gain on an investment asset in the capital gains tax return for the month of sale.
4. Pay any tax due. Crypto gains are part of your total assessable income. If you are an employee, your employer's APIT deductions will not cover crypto gains, so you may need to pay instalments or a balance yourself.

Regulation and tax are separate questions

Whether crypto is regulated, or recognised as legal tender, is a matter for the Central Bank of Sri Lanka, not the IRD. The tax answer does not depend on it: income derived from crypto is assessable under the Inland Revenue Act whether or not crypto is regulated as a financial instrument [1].

Practical compliance tips

1. Use a crypto tax tracker. Tools like CoinTracker, Koinly, or CryptoTaxCalculator can generate tax reports from exchange data.
2. Keep exchange records. Download transaction histories from all exchanges annually. Exchanges can close or restrict access without notice.
3. Convert to LKR at the time of each event. Use a reputable exchange rate source (CoinGecko, CoinMarketCap) and document the rate used.
4. Separate personal and business wallets. If you trade crypto as a business, maintain separate wallets and records.
5. Take advice on large or complex positions. The way Sri Lankan tax law applies to crypto is still developing, especially for DeFi.

Talk to us. If you hold or trade crypto and need the year's gains classified and reported, our tax team can work through your records with you; book a consultation at our contact page.

WinCore Pvt Ltd

This guide is general information on the law as at 15 October 2026 and is not advice on your specific situation.

References

1. Inland Revenue Department. Inland Revenue Act, No. 24 of 2017, consolidated text with amendments to 2025, ss.2 and 93(3), First Schedule para 4(4). https://www.ird.gov.lk/en/publications/Acts_Income%20Tax_2017/IRA_Cons_Act_-_2025_Changes.pdf . Primary. Accessed 15 October 2026.

1. Parliament of Sri Lanka. Inland Revenue (Amendment) Act, No. 2 of 2025, personal relief and individual rates from 1 April 2025. https://www.ird.gov.lk/en/publications/Acts_Income%20Tax_2017/IR_Act_No_02-2025_E.pdf . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. Tax Chart, Year of Assessment 2025/2026, corporate income tax rate. https://www.ird.gov.lk/en/publications/SitePages/tax_chart_2526.aspx . Primary. Accessed 15 October 2026.

1. Inland Revenue Department. Notice to the Taxpayers SEC/PN/IT/2026/02, Amendments to the Inland Revenue Act (8 June 2026), item 20. https://www.ird.gov.lk/en/Lists/Latest%20News%20%20Notices/Attachments/794/SEC_PN_IT_2026-02_E.pdf . Primary. Accessed 15 October 2026.