Saudi Arabia is home to the largest Sri Lankan diaspora in the world — over 600,000 Sri Lankans working in Riyadh, Jeddah, Dammam, and across the Kingdom. Most are employed as domestic workers, construction labourers, healthcare professionals, and engineers. And almost all of them are completely unaware of their Sri Lanka tax obligations — obligations that have grown significantly since April 2025.
The Critical Problem: No DTA Between Sri Lanka and Saudi Arabia
Unlike the UK, Australia, or Canada, Saudi Arabia does not have a Double Taxation Agreement with Sri Lanka. This means there is no treaty protection for Sri Lankans in Saudi Arabia. Combined with Saudi Arabia’s zero personal income tax environment — just like the UAE — this creates a particularly challenging position:
- You pay zero income tax in Saudi Arabia on your salary
- You cannot claim a foreign tax credit (there is no Saudi tax to credit)
- If you are a Sri Lanka tax resident, your Saudi salary is fully taxable in Sri Lanka
- The 15% remittance tax applies in full to all Saudi earnings you remit to Sri Lanka via the banking system
- There is no DTA protection to reduce or eliminate this liability
The 2025 Employment Contract Exemption: Relief for Many Saudi Workers
The IRA Amendment Act No. 2 of 2025 provides significant relief for Sri Lankans in Saudi Arabia who left under a formal employment contract. If you departed Sri Lanka for Saudi Arabia under a qualifying employment contract of at least one year with an employer that has no connection to a Sri Lankan employer of yours, you are automatically treated as non-resident from the first day of the tax year you left.
As a non-resident, your Saudi salary is not taxable in Sri Lanka. However, the 15% remittance tax still applies on Saudi income remitted to Sri Lanka via the banking system — even for non-residents. And with no DTA and no Saudi tax paid to credit, that 15% applies in full.
What This Means in Practice for Saudi-Based Sri Lankans
If you send SAR 2,000 per month to family in Sri Lanka (approximately LKR 165,000/month or LKR 1,980,000/year), the annual 15% remittance tax on that would be approximately LKR 297,000. On SAR 3,000/month it would be around LKR 445,000. Many Saudi-based workers are remitting far more than this.
However — and this is important — not every transfer to Sri Lanka is necessarily subject to the 15% rule. The tax applies to foreign income remitted via the banking system. Structuring remittances correctly, understanding what constitutes a remittance of income versus a transfer of existing savings, and having the right documentation in place can make a significant difference to your liability. This is where professional advice matters most — especially without a DTA to fall back on.
Sri Lanka Property and Family Obligations
Many Saudi-based Sri Lankans maintain property in Sri Lanka, have bank accounts earning interest, or receive dividends. Rental income is subject to 14% WHT, interest on LKR bank accounts to 5% AIT. These obligations exist regardless of your residency status and must be declared in your IRD return.
File by 30 November 2026 — Don’t Wait
The IRD’s field program is actively checking compliance across Sri Lanka. With 600,000+ Sri Lankans in Saudi Arabia many of whom have been filing nothing, this is now a genuine risk — especially for those who return to Sri Lanka with significant overseas savings.
Use our free Sri Lanka Expat Tax Checker to confirm your residency status and understand your position. Then message GDP Consultants on WhatsApp — we specialise in tax planning for Gulf and Saudi-based Sri Lankans where the absence of a DTA makes professional advice especially valuable.
Written by Lal Kumarasiri, Chartered Accountant (ACA, MAAT), GDP Consultants Pvt Ltd. Questions about your specific situation? WhatsApp us or email info@taxcalculator.lk.