In 2018, the Law on New Internal Revenues in Sri Lanka entered into force, as a result of which the tax system was simplified, it became more transparent and efficient. Instead of many corporate tax rates, a three-level structure of corporate rates has been introduced, and the rule for deducting expenses has been simplified. This will help investors, who plan to register a company in Sri Lanka, generate more income. A wide range of tax holidays, partial tax benefits has been eliminated. Capital gains taxation and expansion of withholding tax coverage (WHTs) have been introduced.
Sri Lanka (translated as "a magnificent island") is an island state in South Asia, surrounded by the Indian Ocean, the Bay of Bengal and the Gulf of Mannar. It is divided into 9 provinces and 25 districts. The official languages of Sri Lanka are Sinhala and Tamil, and the currency is Sri Lankan rupee (LKR).
Sri Lanka's trade focuses on spices and gems. It attracts Arab, Persian, and Chinese traders and investors looking to start a business in Sri Lanka. The economy is developing around plantations. Railways and roads were built here, the economic and social infrastructure was created.
The United Nations Development Program and the United Nations International Children's Emergency Fund (UNICEF) rank Sri Lanka as one of the best among developing countries in terms of human development index.
If you want to set up a company in Sri Lanka or to open a multi-currency bank account in Sri Lanka, YB Case will provide personal advice in registering international business.
The important economic activity in Sri Lanka is agriculture. Tourism also plays an increasingly important role in the economy.
Over the past decade, the Sri Lankan government has pursued a policy of industrialization as a means of achieving growth, job creation, and diversifying an economy based on agricultural exports.
The Sri Lanka Investment Council is the statutory body responsible for promoting and approving foreign and domestic investment in the country. It plays a key role in implementing the industrialization strategies of Sri Lanka, which are aimed at the exportation of products/services.
In what legal form to set up a firm in Sri Lanka to avoid taxes?
- You can open resident companies, government corporations in Sri Lanka. The founders of these companies are responsible for the income, that goes into the accounts of such companies. Construction firms, pension funds, reserve funds are also considered a company.
- You also can establish a partnership in Sri Lanka (number of partners 20 or more). Such organizations have limited liability for partnership debts. A mutual fund is also considered a commercial organization (this type of company is subject to corporate tax). Non-resident missions are responsible for commercial, investment, other sources, depending on the profits made in Sri Lanka.
To set up an enterprise in Sri Lanka, one director (any residency), shareholder and secretary are enough. Neither a minimum authorized capital nor a physical office is required.
Establishment of commercial organizations in Sri Lanka: tax rates
Source of income in 2018/19
A preferred agricultural trade
To open a Sri Lanka tourism firm
To register an educational services company in Sri Lanka
To open an enterprise in Sri Lanka, aimed at implementing information management
To start business for the export of goods/ services (includes certain enterprises *)
To open small / medium-sized commercial organizations in Sri Lanka with gross profit for the year of 500 million LKR
Income from other business, including mutual investment funds
To set up a commercial firm in Sri Lanka related to:
* THE SPECIFIED ENTERPRISE PERFORM THE FOLLOWING ACTIONS:
- Import, minor processing and re-export.
- companies, where products are bought or manufactured in one country, then they are transported to another without delivery to Sri Lanka.
- Obtaining licenses to provide front-line services to customers abroad.
- Financial supply chain management mechanisms.
- Logistic services.
- Reloading operations.
- Services of forwarders.
- The provision of services directly and payment in foreign currency.
- Repair of ships, shipping containers, providing computer software, computer programs / systems, recording computer data.
- Sale of precious stones, jewelry in foreign currency.
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A dividend tax
It makes up 14% of gross dividends, with the exception of dividends from another resident company.
A transfer tax
If the profit of a non-resident company is transferred in the tax year, 14% of the amount of transfers is payable.
If you still have questions about how to establish a firm in Sri Lanka or how to open a corporate account in Sri Lanka remotely, request for advice on obtaining business licenses in Sri Lanka from a specialist of YB Case company by contacting us in a convenient way for you.