Sri Lanka

Sri Lanka - Mixed (Civil and Common law)
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Sri Lanka taxes

If you want to do business in Sri Lanka, reading this will help you becoming knowlegeable on the specific tax laws and rates for a LLC which is the most common company structure in Sri Lanka.

Sri lanka taxes corporate income, whether it is earned onshore or offshore. The usual approximate tax rate for offshore income, from our research, and this is not personal tax advice, is 28%. The country may not have exemptions to transfer in income accrured abroad. Corporate Income Tax in Sri Lanka ranges from 14% to 40%, depending on the nature of the business income. However, the effective tax rate for most type of income is 28%. This ranks Sri Lanka as 130th overall in terms of corp. taxation rate internationally.

The valued added tax rate in LK is 15%, that ranks Sri Lanka as 79th overall with regards to VAT globally. In terms of other taxation, an employer will contribute 15% to the equivalent of a social security fund and an employee will contribute 8%. The overall complexity of the tax system is low. This is measured by average time to comply with a country's labor tax requirements is as it is 9hours. Contributing to this is the number of yearly labor tax payments, which is 1 in LK.

Thin capitalisation laws are officially enacted. Thin capitalisation refers to any sort of requirements on a business and the debt-to-asset ratios. Dividends paid to resident companies are subject to a final withholding tax of 14%. Stock dividends are not usually subject to withholding tax. Dividends from foreign entities may be considered taxable income and subject to corporate income tax at normal rates. Dividends are distributions of a portion of company's earnings, determined by the board, to shareholders. Dividends can be issued as cash payments, shares of stock, or other property. Capital gains from the transfer of immovable properties are included in corporate income tax and taxed at a flat rate of 10%. Other Capital Gains are not taxable. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.

Interests and royalties withholding tax rate is estimated at 20%. Which means that the tax authorities expects LLC's to pay tax on at least 20% of payments on interests and royalties to non-residents. The dividends withholding tax rate is 14%. This means that the tax authorities expects LLCs to pay tax on at least 14% of dividends paid to non-residents. Withholding taxes may be reduced under a tax treaty.
There is no known tax on wealth in Sri Lanka. There are no inheritance and transfer taxes in Sri Lanka. There are local real property taxes. We are not aware of any frequently implemented R&D initiatives that provide tax relieft in this country.

The above is not tax or legal advice for your particular circumstances. We are able to reference you to a tax advisor in Sri Lanka who can give you the proper advice and help you need. Ready to get started? Click the free consultation button above.

It takes approximately 16 hours to file and prepare documents for a Sri Lanka Mixed (Civil and Common law).
The corporate tax is approximately 28% which is 130 in the world.

Owners of a company in Sri Lanka are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.

The vat rate in Sri Lanka is 15% which ranks 78 in the world.

Patent box
RND credit
Wealth tax
Estate tax
Transfer taxes
Asset taxes
Capital duties
34Tax treaties
28%Offshore Tax
28%Corp rate
-Loss carryback years
16Corporate time
15%VAT rate
0%Capital gains
NoAEOI planned

Read this to learn about incorporating a company in
Sri Lanka

We can help you form a company in Sri Lanka. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Sri Lanka, which is required by law.

Sri Lanka Tax Treaties

CountryTypeDate signed
DTC 2013-01-22
DTC 2011-07-24
DTC 1982-06-29
DTC 2004-11-07
Czech Republic
DTC 1978-06-26
DTC 2011-11-07
DTC 1999-03-02
DTC 1981-09-17
DTC 1982-05-18
United States
DTC 1985-03-14
DTC 1981-10-05
DTC 2014-04-04
DTC 1989-12-18
DTC 2013-01-30
DTC 1984-10-19
DTC 1983-02-23
DTC 1981-12-22
DTC 1984-03-28
United Kingdom
DTC 1979-06-21
DTC 1993-02-03
DTC 2000-12-11
DTC 1978-07-26
DTC 1980-04-25
DTC 1986-12-04
DTC 1983-01-11
DTC 1979-09-13
DTC 1997-09-16
DTC 2003-08-11
DTC 1982-11-17
DTC 1983-02-03
Japan DTC 1967-12-12
DTC 1996-03-12
South Korea
DTC 1984-05-28
United Arab Emirates
DTC 1992-07-07

Country Info

National Flag of
ශ්‍රී ලංකා ප්‍රජාතාන්ත්‍රික සමාජවාදී ජනරජය (sin)
இலங்கை சனநாயக சோசலிசக் குடியரசு (tam)
Area Code
Southern Asia
Native Languages