Sri Lanka
Set up a Sri Lanka company in 2–4 weeks with 100% foreign ownership. BOI incentives and Port City Colombo's 0% tax make it competitive.
Foreign Ownership Eligibility
Sri Lanka welcomes 100% foreign-owned companies
Fully remote formation — you never need to set foot in the country.
- 100% foreign ownership permitted in most sectors — no local partner required
- No minimum paid-up share capital under the Companies Act No. 7 of 2007
- Single-person company permitted — one person can be sole director and sole shareholder
- Local registered office address required (a virtual office or registered agent address is acceptable)
- Foreign shareholders' documents (passport, proof of address) must be notarised and apostilled
- Certain sectors are restricted — verify against the BOI negative list before incorporating
- Land ownership is restricted — foreigners may only lease land (up to 99 years); freehold purchase is prohibited
Ownership
100% Foreign OK
Formation
100% Remote
Note
Physical presence is NOT required for incorporation — but IS required to open a corporate bank account. No Sri Lanka bank currently offers fully remote corporate account opening for foreign-owned companies. Plan for an in-person visit or authorise a local representative with notarised power of attorney.
Tax at a glance
Sri Lanka Tax Overview
30%
Standard corporate income tax
Applies to most companies; year of assessment runs April 1 – March 31
15%
Concessionary CIT for SMEs and exporters
Reduced rate for qualifying small businesses and export-oriented companies
0–15%
BOI-approved company rate
BOI agreements grant 0–15% CIT for 5–10 years depending on investment type and size
0%
Port City Colombo SEZ (Primary BSI)
0% CIT for up to 23 years for Primary Business of Strategic Importance classification under Colombo Port City Economic Commission Act No. 11 of 2021
7.5%
Port City Colombo SEZ (Secondary BSI)
7.5% CIT for 4 years for Secondary BSI classification within the Port City SEZ
18%
Value Added Tax (VAT)
Mandatory registration if turnover exceeds LKR 80 million/year; monthly filing
2.5%
Social Security Contribution Levy (SSCL)
On turnover; businesses meeting the threshold file monthly by the 20th
10%
Capital Gains Tax (CGT)
On disposal of assets including shares
15%
Withholding tax on dividends
Resident and non-resident shareholders; DTA treaty countries may qualify for reduced rates
45+
Double Taxation Agreements
DTAs with UK, India, Singapore, Malaysia, Thailand, USA, Germany, and others reduce cross-border tax costs
30 Nov
Corporate income tax return deadline
Annual return due November 30 for the preceding year of assessment (April–March)
Pros & cons
Advantages & Considerations
Key Advantages
100% foreign ownership permitted in most sectors with no mandatory local partner requirement. A single foreign national can be the only director and shareholder of a Sri Lanka Pvt Ltd company under Companies Act No. 7 of 2007.
Port City Colombo SEZ offers 0% corporate income tax for up to 23 years for Primary Business of Strategic Importance (BSI) classification — with 100% capital and profit repatriation in 16 designated foreign currencies.
BOI-registered companies access tax holidays of 0–15% CIT for 5–10 years, duty-free imports of capital goods, and facilitated land allocation — with minimum investment thresholds for qualifying projects.
Indian Ocean location on major shipping lanes between South Asia, Southeast Asia, the Middle East, and Africa. Colombo Port handled 8.29 million TEUs in 2025, ranking among the top 25 container ports globally.
Free Trade Agreements with India (ISFTA), Pakistan (PSFTA), and Singapore (SLSFTA). Sri Lanka-based export operations can access the 1.4 billion-consumer Indian market under preferential tariff terms.
Educated, English-speaking workforce with a literacy rate exceeding 92%. Universities produce graduates in engineering, IT, and finance. Sri Lanka's IT/BPM sector employs 130,000+ professionals.
GDP grew 5.0% in 2024, backed by a USD 2.9 billion IMF Extended Fund Facility (2023) and completed external debt restructuring in 2024–2025.
No statutory minimum paid-up capital required to incorporate a Private Limited Company — you can incorporate with LKR 1 in stated capital.
45+ Double Taxation Avoidance Agreements (DTAs) with countries including the UK, India, Singapore, Malaysia, Thailand, the USA, and Germany. Treaty rates reduce withholding tax on dividends, royalties, and management fees.
24 Licensed Commercial Banks supervised by the Central Bank of Sri Lanka (December 2025), including HSBC, Standard Chartered, Citibank, and Deutsche Bank. Full capital and profit repatriation permitted after tax.
Considerations
Standard corporate income tax rate is 30% — among the highest in South and Southeast Asia. Without BOI or Port City SEZ incentives, the tax burden is significant compared to Singapore (17%), Vietnam (20%), or Malaysia (24%).
Foreign companies and individuals cannot purchase freehold land in Sri Lanka under the Land (Restrictions on Alienation) Act No. 38 of 2014. Only long-term leases (up to 99 years) are permitted, complicating real estate-linked investments.
No remote bank account opening. Physical presence or a local authorised representative with notarised power of attorney is required by all 24 Licensed Commercial Banks. This adds 5–15 business days and travel costs to setup.
History of policy instability. Tax rates, BOI incentive terms, and foreign investment rules have changed multiple times in recent years, including during the 2022 economic crisis. Investors must verify current rules before committing.
Sri Lanka completed an external debt default in 2022 and only finished restructuring in 2024–2025. While macro-stability has returned, sovereign risk ratings remain elevated compared to pre-crisis levels.
Certain sectors are restricted or closed to 100% foreign ownership. The negative list includes: pawn broking, coastal fishing, retail trade below USD 1 million investment, mass transportation, travel agencies, and newspaper publishing.
Currency risk is material. The Sri Lankan Rupee (LKR) has depreciated significantly — from approximately LKR 200 per USD before 2022 to LKR 316–324 per USD as of May 2026. Unhedged LKR exposure carries real devaluation risk.
Annual statutory audit is mandatory for all companies incorporated under Companies Act No. 7 of 2007, even small Pvt Ltd companies. This adds USD 460–1,540/year in audit fees on top of other compliance costs.
Employing foreign nationals requires Residence Visa approval and quota clearances from the BOI or Ministry of Labour for non-BOI companies. This can slow deployment of expatriate management staff.
Five income tax installments per year, plus monthly VAT, SSCL, WHT, and PAYE returns. Without a local accountant, the filing calendar is genuinely difficult to manage.
Structural Comparison
Private Limited Company (Pvt Ltd)
Public Limited Company (PLC)
Branch of a Foreign Company
Representative Office
Incorporation Process
The process is strictly digital. Each stage builds on the previous one.
Free consultation with XBandGlobal specialists to confirm the right entity structure (standard Pvt Ltd, BOI-registered, or Port City SEZ), clarify sector restrictions, and outline realistic costs and timelines.
Search and reserve your company name on the DRC eServices portal. Name availability is confirmed immediately; reservation secures the name while documents are prepared.
Prepare incorporation documents: Articles of Association, Form 1 (Application for Incorporation), Form 18 (Directors), Form 19 (Registered Office address). Foreign shareholders must notarise and apostille documents from their home country.
XBandGlobal's Sri Lanka partner submits the full application package to the Department of Registrar of Companies (DRC) via the eServices portal.
DRC reviews the application and issues the Certificate of Incorporation — typically within 1–3 business days for online submissions. You receive your official company registration number.
What you'll pay
Cost Architecture
Government Fees
Annual Ongoing
Professional Services
Government registration fees in Sri Lanka are low — total government costs to form a Pvt Ltd are under USD 65. The real cost is professional services (notarisation of foreign documents, company secretary, audit) and the time required for an in-person banking visit. For BOI or Port City SEZ routes, specialist consultants are effectively mandatory, adding USD 1,000–5,000 to your setup budget.
Still unsure about costs?
These are estimates — your actual cost depends on your structure
Every Sri Lanka setup is different. A 15-minute call with one of our specialists will give you a personalised cost breakdown — completely free.
Fintech & Banking
Can non-residents open accounts without visiting? NO.
Banking options for non-resident founders in Sri Lanka. Remote account opening availability varies by institution.
| Institution | Type | Ease for Non-Residents | Notes |
|---|---|---|---|
| Commercial Bank of Ceylon PLC | Local LCB | Low (Visit Required) | Largest private sector bank by assets. Active trade finance desk — widely used by foreign-owned import/export companies. In-person KYC required. |
| Hatton National Bank PLC (HNB) | Local LCB | Low (Visit Required) | Full-service commercial bank with the widest branch network among private lenders. Good for companies with regional operations. In-person visit required. |
| Sampath Bank PLC | Local LCB | Low (Visit Required) | More developed digital banking tools than most local peers. Responsive to SME clients. In-person KYC required for new corporate account opening. |
| Bank of Ceylon (BOC) | State-owned LCB | Low (Visit Required) | Largest bank in Sri Lanka by total assets. Government-owned. Extensive branch network. Preferred by some BOI-registered companies for government-related transactions. |
| People's Bank | State-owned LCB | Low (Visit Required) | Second-largest state bank. Large retail and SME footprint. In-person KYC required. |
| DFCC Bank PLC | Local LCB | Low (Visit Required) | Development finance focus. Well-suited to project finance, SME lending, and capital investment businesses. |
| National Development Bank PLC (NDB) | Local LCB | Low (Visit Required) | SME-focused development bank. Useful for qualifying BOI investment-linked businesses. |
| HSBC Sri Lanka | International LCB | Low (Visit Required) | Familiar infrastructure for MNCs with existing HSBC global relationships. Expect thorough AML/KYC checks and a longer onboarding process. In-person visit required. |
| Standard Chartered Bank | International LCB | Low (Visit Required) | Handles international trade, treasury, and cross-border transactions well. Preferred by larger foreign corporates. In-person KYC required. |
| Citibank N.A. | International LCB | Low (Visit Required) | Corporate and institutional banking focus. Limited retail or SME services. Best for large MNC subsidiaries with global Citi banking relationships. |
| Deutsche Bank AG (Colombo Branch) | International LCB | Low (Visit Required) | Institutional banking for large corporate clients. Not suited for SMEs. Primarily used for wholesale and custody banking. |
Frequently Asked
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