Sri Lanka has a treaty but no totalization agreement, and its rates moved recently.
There is a US–Sri Lanka income tax treaty, so Sri Lankan income tax is creditable. There is no totalization agreement, so US self-employment tax at 15.3% applies in full. Sri Lankan personal rates were revised upward in recent fiscal reforms, which changes the exclusion-versus-credit comparison from what it was a few years ago.
Tax snapshot — Sri Lanka
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Sources: IRS Publication 54; IRS Publication 901; US–Sri Lanka income tax treaty (1985, in force 2004); SSA totalization agreement list; Rev. Proc. 2025-32. Checked 1 September 2026. Sri Lankan rate stated as at the 2025/26 year of assessment.
What that means on your return
Sri Lankan personal income tax rates were increased materially during the post-2022 fiscal reforms, reaching 36%. Any comparison of the exclusion against the credit that relies on older rate assumptions is out of date.
The treaty relieves double income tax and Sri Lankan tax is creditable. It does not reach social security, so consultants and contractors pay SECA in full on net self-employment income.
Foreign currency accounts held by non-residents are common in Sri Lanka and count towards both the FBAR $10,000 aggregate and Form 8938. Local tax treatment of the interest has no bearing on either.
Where a rate or a relief cannot be verified for the tax year in question, this guide says so rather than carrying a figure. Bring your Sri Lankan assessment to the call and the comparison is done on the real number.
Questions I get about Sri Lanka
Have Sri Lankan tax rates changed?
Yes — personal rates were revised upward in the post-2022 fiscal reforms and now reach 36%. That materially affects whether the foreign tax credit or the exclusion is better on your numbers.
Do I report my Sri Lankan foreign currency account?
Yes, if your foreign accounts together crossed $10,000 at any point in the year. Local tax treatment of the interest does not change the US reporting obligation.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Sri Lankan bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from Sri Lanka this year?
Twenty minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 17 years in practice, 12 of them as an Enrolled Agent.