FAQ

Pre Incorporation

The cost of setting up a Private Limited Company (Pvt Ltd) in Sri Lanka is very affordable. Please refer to the Company Formation section for the pricing or speak to our Japanese Guest Relation (JGR) for more information on the latest promotion available.

  1. Strategic Location – Sri Lanka is a strategically situated island at the crossroads of major shipping channels to South Asia, the Far East and the continents of America and Europe, making the country a convenient port of call for airfreight services and shipping lines. Both air & seaports with easy accessibility via highways & other road networks makes the logistical process smooth & time saving.
  2. Educated & Adoptable Workforce – Sri Lanka comprises a highly versatile and skilled workforce which is cost competitive, highly productive and bilingual. Majority of the Sri Lankan workforce consists of highly qualified professionals having extensive experience in numerous fields such as information technology, manufacturing, finance and accounting, fashion design and law. Moreover, both skilled and unskilled labour is relatively cheap among all industries.
  3. Investment Incentives – There are a number of incentives given by the government to boost the FDIs flowing into the country. Those are in the form of fiscal incentives, concessions and through bilateral investment protection treaties (BITs).
  4. Quality of Life – A country of many facets, Sri Lanka offers a spectrum of experiences, cultures and places for those who enjoy diversity and variety. The country’s expansive beaches, rolling hills, rainforests and cosmopolitan cities make Sri Lanka an eclectic experience for all. Sri Lanka’s capital Colombo has the vibrant cosmopolitan living environment with no shortage of social life. Further there is an extensive choice of quality education to be obtained in the city and private hospitalization & healthcare with state-of-the-art facilities.
  5. Fast Developing Infrastructure – There are ambitious programs to develop and completely upgrade seaports around the island, the international airports, roads in the city of Colombo and highways connecting to other parts of the country and power and telecommunication facilities.
Tax Incentives

  1. Relief from double taxation for foreign investors

Sri Lanka has entered into Double Taxation Avoidance Agreements with 44 countries to eliminate or mitigate the incidence of juridical double taxation and avoidance of fiscal evasion in the international transactions & trade.

  1. Zero present & reduced Corporate Income Tax (CIT) rates

Industries such as IT, Agro, Export under zero CIT rates and many SMEs that fulfil the criterias will be under a reduced rate of CIT.

Infrastructure

Foreign investors may leverage on vast infrastructure available in Sri Lanka as this infrastructure has ready available facilities, and additional tax incentives offered within the area. These are:

  1. Free Trade Zone (FTZ)

Number of FTZs with access to seaports and airports with excellent road networks.

  1. Special Economic Zone (SEZ) 

The Colombo Port City will be a SEZ with tax concessions given to the trading of specific goods, banking and foreign exchange with the intention of making into a business hub.

Sri Lanka highly welcomes foreign investors to set up business in their country. Following are some of the key considerations that every investor should make aware of before setting up a company in Sri Lanka;

  • Is your business permissible by Sri Lankan authorities for 100% foreign ownership?
  • What is the minimum paid up capital required for your business nature (if any)?
  • What is the minimum paid up capital for a foreigner able to apply for an expatriate visa in Sri Lanka?

At this moment, unfortunately we do not provide any market research services for businesses.

Sri Lanka is a safe country to live in. It is famous for its hospitality, while claimed by both locals and expats alike as a truly great place to live and work.

Sri Lanka is a relatively affordable country to live in. In recent decades Sri Lanka has recorded respectable economic growth by international standards. Because of its good potential, the Sri Lankan economy continued to grow quite strongly during the internal conflict that lasted for nearly 26 years. After the conflict ended in 2009, economic growth recovered well, assisted by good commodity prices. With continued growth, the poverty incidence has declined significantly.

Foreign Direct Investment (FDI) from Japan to Sri Lanka dates back to the 1970s. Japanese investments have contributed immeasurably to the country’s industrial development, particularly in the electronics, auto, ceramics, engineering and metal-based sectors. These enterprises consist of both large investments under the Board of Investments (BOI) laws and medium investments under the normal laws.

The National Language of Sri Lanka is Sinhala. However, English is widely understood and spoken at the workplace. Nowadays Schools provide English medium studies to most students and all tertiary education is taught in English.

Company Formation

Once the required documents are submitted to OCS, it takes about 7 to 10 working days to complete the incorporation process. Even though the registration process is done online via eROC system, Registrar of Companies (ROC) in Sri Lanka do not accept digital signatures of Directors or Company Secretaries.

Yes, you may incorporate a Private Limited company in Sri Lanka via online through eROC system & without physically being present in Sri Lanka. However, the original signed copies must be submitted to the Department of the Registrar of Companies (ROC) since the ROC does not accept electronic signatures. Further, keep in mind that you are required to have at least one (1) Sri Lankan resident director. OCS offers nominee director service for investors who do not have any local resident director. Thus, it will make it easier for you to set up your private limited company.

Yes our Japanese Guest Relation (JGR) will update you from time to time on the status of the application.

Foreign ownership is welcome in almost all sectors of the economy, except a few regulated areas. Investors are permitted to repatriate 100% their profits and exempted from most of the exchange control regulations. They can also enjoy preferential tax benefits and constitutional guarantees on their investment in Sri Lanka.

There are also different qualifying criteria for different sectors such as manufacturing, agriculture and services. Incentives that may be provided by the BOI range from the grant of duty-free imports for capital goods and raw materials (for export oriented services); exemption from Value Added Tax; Customs Duty and Port & Airport Development Levy (PAL); and exemptions from Exchange Control restrictions.

Investments identified by the BOI as a strategic development project under the Strategic Development Projects Act No. 14 of 2008 (as amended) would be eligible for full or partial exemptions on Income Tax; Value Added Tax; etc and other special concessions up to a maximum of 25 years.

Advantages:

  1. Limited liability feature – shareholders not personally liable for debts and losses of the Company. Shareholders’ liability are limited to the amount of shares subscribed.
  2. Shares are transferable – transfer is easy through sale of shares.
  3. Separate legal entity – A company does not cease to exist if one or more of its shareholders die.
  4. Easier Access to funding – it added business credibility and good image. Thus, increase the potential of loans from financial institutions.
  5. Tax advantage – profits tax at lower tax rate i.e. income tax 14%

Disadvantages:

  1. Number of Shareholder – The number of shareholders cannot exceed the number of 50.
  2. Prospectus to Public – Company cannot be issue prospectus to public.
  1. Minimum 1 shareholder with LKR 100,000 paid up capital.
  2. Minimum 1 Sri Lankan Director
  3. Registered Company Secretary with ROC
  4. Open Bank Account 
  5. Give public notice on public papers.

The application for company incorporation has been submitted online since April 2018. The company must submit the following documents to the Department of the Registrar of Companies:

  • Form 1 – Registration of a company
  • Form 18 – Consent and certificate of director
  • Form 19 – Consent and certificate of secretary
  • One copy of Articles of Association

All documents are submitted by scanning the original and uploading it through the e-ROC website and the payments are made online.

Yes, it is required for investors to fill up the company incorporation form in English language and supporting documents as well. However, in some cases, for the purpose of Know Your Client process, our local Japan representative might request further documentation if necessary.

  • All Private Limited (Pvt Ltd) Companies are to be registered with the Registrar of Companies (ROC) of Sri Lanka.
  • ROC is a statutory body which regulates companies and businesses in Sri Lanka.
  • You may engage OCS; that provides company secretarial service to assist in the whole registration and company formation process in Sri Lanka.
  1. Contact our Japanese Guest Relation team at H.I.S. Co., Ltd. 
  2. We will define on your business nature and activities to match your objective in Sri Lanka.
  3. Decide your shareholding structure with minimum one Shareholder.
  4. Decide the key positions of Directors with minimum one Director.
  5. Fill in our Incorporation Form and provide the required documents.
  6. Sign our Client Service Agreement and make payment.

After Company Formation

Sri Lanka has a geographic position on Southeast Asia radar as is an island country located in the indian Ocean Southeast Bay Begal. As for services, if you are looking to set up business in Sri Lanka, Colombo is the ideal place because it is the largest capital city and centre of commerce in Sri Lanka. 

  1. It is required to open a tax file after 30 days of the first financial year. The filling of the tax return is on or before every 30th of November.
  2. Within the 14 days of the first employee, registration of Employees Provident Fund (“EPF”) through the Labour Office or Commissioner of Labour. 
  3. Apply for Business License

In Sri Lanka, different banks have different requirements and documentations required. Most of the banks provide the application form before registering. You are advised to speak to the respective bank for opening a local bank account. 

The next step after registering with above bodies, the Company may proceed with a business license application. It is essential for every business to have a valid license to start a business in Sri Lanka. Generally there are 3 different group of license involved, namely:

  1. Business Premise and Signage Licenses
  2. Industry/ Sector – Specific Licenses Permits
  3. Activity – Specific Certification

Please refer to our customer booklet on further details regarding the above.

Generally, Companies who want to apply for foreign expatriates’ visas need to go through the Department of Immigration in Colombo. The Company must be registered under the Companies Act No 7 of 2007 and provide the valid employment offer letter to apply the Entry Visa . For more information, please refer to our customer booklet.

The standard sales tax of 8% effective on 1 December 2019. 

Effective from 1 January 2020, the standard of corporate tax was reduced from 28% to 24%. The concessionary rate of 14% is also available to certain businesses which are defined in Inland Revenue of Act. For more information, please refer to our customer booklet.

Excise duties are imposed on schedule bases with the Harmonized System of Classification .

There were 3 import duty rates of 0%, 15% and 30%. Some of the imported goods can be a total 100% (luxury vehicle) imposed on Sri Lanka.

Sri Lanka Customs regularly update the import tariff guidelines, please refer to our Japanese Relationship Manager in Japan and in Sri Lanka are able to assist you with your needs and inquiry.

Yes, OCS provides one stop solution for tax consultation, audit, and legal services.

Yes, our Japanese Relationship Manager in Japan and in Sri Lanka can assist you with your needs and inquiry.