Business guide for Sri Lanka: how to set up

What you need to know

1. Can a foreigner own 100% of a Sri Lankan company?

   Business structure in Sri Lanka, Private limited company (foreign shareholders allowed), what it may do: Up to 100% foreign ownership is allowed, except: no foreign shares at all in pawn broking, coastal fishing, or retail with under USD 5 million of foreign capital; a 40% cap (unless the BOI approves more) for education, travel, shipping and freight agencies, mass media, deep-sea fishing, local-timber industries, mining, and growing tea, rubber, coconut, cocoa, rice, sugar or spices. One shareholder is enough (a person or a company). At least one director, and a company secretary with the qualifications the Companies Act requires. The name ends “(Private) Limited” or “(Pvt) Ltd”. If any shareholder is foreign, the company’s objectives must be written into the articles.

   Where this comes from

   • DRC, Table of Fees (archived 13 Jul 2026; read 25 Oct 2026), read 25 October 2026

2. What taxes does a company pay in Sri Lanka?

   Business taxes in Sri Lanka: Company profit: 30% (exported services 15%); VAT: 18%; register at Rs 15 million a quarter; SSCL: 2.5% of part of turnover; Dividends paid: 15% withheld; Branch profit sent home: 14%; Staff funds: EPF 12% + 8%, ETF 3%; Tax year: 1 April to 31 March.

   Where this comes from

   • IRD, Tax Chart Year of Assessment 2025/2026 (25 Oct 2026), read 25 October 2026

3. How much must you invest for Board of Investment approval?

   Business structure in Sri Lanka, Company approved by the Board of Investment (Section 17), what it may do: Minimums: IT, IT-enabled services or outsourcing USD 150,000; regional headquarters USD 250,000; export manufacturing, tourism or logistics USD 500,000; manufacturing for the local market USD 5 million. The BOI must approve the draft articles before the company is incorporated. Projects over USD 50 million can apply to be Strategic Development Projects, with tax holidays of up to 10 years.

   Where this comes from

   • BOI, home and Contact Us directory (25 Oct 2026), read 25 October 2026

4. What incentives does Sri Lanka offer business investors?

   Incentives and schemes for businesses in Sri Lanka: BOI Section 17: capital allowances of 100% to 200%, duty-free capital goods, VAT deferral; BOI zones with land at fixed prices; Strategic Development Projects over USD 50 million: tax holidays up to 10 years; Colombo Port City: tax holidays for strategic businesses; India–Sri Lanka free trade agreement; ICTA start-up programmes (StartupSL); Government SME loans through banks, for registered businesses under Rs 1 billion turnover and 200 staff (trading and renting excluded); Export Development Board grants: only for companies at least 51% Sri Lankan-owned.

   Where this comes from

   • BOI, New Investor page: thresholds, charges, land rent, annual fees (25 Oct 2026), read 25 October 2026

5. Can a foreign company open a branch in Sri Lanka?

   Business structure in Sri Lanka, Branch of a foreign company (overseas company), what it may do: Any foreign company may register a place of business in Sri Lanka. Banned for branches: money lending (except banks), pawn broking, retail under USD 5 million, coastal fishing, growing tea, rubber, coconut or rice, mining, freight forwarding, shipping agency, gem mining and lotteries. Education, mass media and outbound travel need approval first. A liaison office is also possible: it may not earn income, and its costs come in through an IIA.

   Where this comes from

   • DRC, Table of Fees (archived 13 Jul 2026; read 25 Oct 2026), read 25 October 2026

6. What does a Colombo Port City business licence cost?

   Business structure in Sri Lanka, Colombo Port City licensed business: Licence: From the Port City Economic Commission, renewed every 12 months; Fees: USD 5,000 to apply; USD 2,500 a year; Revenue rule: Over 50% from clients other than Sri Lankans outside Port City; Big projects: Tax holidays of 8–15 years from USD 25 million. Official fees: Application: USD 5,000; Annual renewal (from year 2): USD 2,500. Time: Decision: No official time is published; Licence: Lasts 12 months; renewal fee due 2 months before expiry.

   Where this comes from

   • CPCEC, Application Process (25 Oct 2026), read 25 October 2026