Sri Lanka (LK)
Sri Lanka is South Asia's most beloved island destination — a tropical tear-drop off India's southern tip offering ancient Buddhist temples, colonial hill stations, spice gardens, surf beaches, and world-renowned tea.
Capital: Sri Jayawardenepura Kotte
Region: Asia
Language: Sinhala
Currency: LKR (Rs)
Cost of living: Very affordable (index 28)
Emergency: 119
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Business Setup
Start a business or go freelance in Sri Lanka.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 Register a Business Name at the Registrar of Companies (bizreg.cbsl.gov.lk) — LKR 2,000–5,000. Sri Lankan residents can register sole proprietorships; foreign nationals should use a Pvt Ltd company.
- 2 Obtain a Taxpayer Identification Number (TIN) from the Inland Revenue Department (ird.gov.lk). Required for all tax purposes. Free registration.
- 3 Register for VAT with the IRD if annual taxable supplies exceed LKR 60 million. VAT-registered businesses must file monthly returns.
- 4 Open a business bank account — Commercial Bank or Sampath Bank are recommended. Multi-currency account useful if earning in USD/EUR from foreign clients.
- 5 Register for EPF as a self-employed contributor if you have employees — EPF contributions are mandatory for all employees you hire.
- 6 Issue invoices with your TIN, service description, date, and GST/VAT breakdown if VAT-registered. Retain all invoices for 5 years.
- 7 File annual income tax return with the IRD by November 30. Use the IRD's RAMIS (Revenue Administration Management Information System) online portal.
- 8 Pay quarterly advance tax payments if annual tax liability exceeds LKR 600,000.
Tax registration
All self-employed individuals and freelancers must obtain a TIN and file annual returns. Income tax is assessed on net profit (income minus allowable business expenses). Tax brackets: 0% on first LKR 1.2M/year, 6–36% progressive rates above. Allowable deductions include: office rent, equipment, professional subscriptions, internet/phone costs, and travel for business. Engage a registered tax agent (CASL-certified chartered accountant) for preparation and filing.
VAT threshold
LKR 60,000,000 annual taxable supplies (2026)
Invoicing
Invoices must include: your TIN, client TIN (for B2B transactions), description of services, amount in LKR (or foreign currency with LKR equivalent at CBSL rate), date, and VAT breakdown if VAT-registered. For foreign clients: invoice can be in USD/EUR. All invoices must be retained for a minimum of 5 years. VAT-registered businesses must use an electronic fiscal device (EFD/EFAS) for retail transactions.
Social security
Self-employed individuals are not automatically enrolled in EPF/ETF (these are employer-employee schemes). Voluntary contributions to EPF are not available for self-employed. Private pension plans (through insurance companies: Ceylinco Life, AIA, Union Assurance) are the primary retirement saving vehicle for freelancers. National savings certificates and fixed deposits at NSB (National Savings Bank) are popular saving instruments.
💡 Sri Lanka's growing IT and BPO sector attracts significant foreign freelance talent. Many remote workers earning in USD operate via Personal Foreign Currency Account (PFCA) or Inward Remittance Account — these accounts allow holding and using foreign currency in Sri Lanka without mandatory conversion to LKR. All foreign-source income earned while resident in Sri Lanka is potentially taxable. Consult a tax adviser (CASL-registered) before structuring your freelance business. Currency controls are less strict since IMF reforms but large transfers still require documentation.
🏢 Business Structures
Private Limited Company (Pvt Ltd) · Private Limited Company
Limited Company / Ltd
LKR 100,000 (minimum stated capital); no prescribed minimum paid-up capital
Min. capital
3–7 business days online via CBSL BR Portal (bizreg.cbsl.gov.lk)
Setup time
Liability: Limited to share capital
Setup cost: LKR 15,000–50,000 (government fees) + professional fees LKR 30,000–100,000
Best for: Most foreign-owned businesses, BOI-registered companies, SMEs, and professional services. Required for most formal tenders and BOI registration. Preferred by international employers and partner organisations.
Sole Proprietorship · Sole Proprietorship / Business Name Registration
Sole Trader
None
Min. capital
1–3 business days
Setup time
Liability: Unlimited — personal assets at risk
Setup cost: LKR 2,000–5,000 (registration fee)
Best for: Sri Lankan nationals only. Foreign nationals generally cannot operate as sole proprietors without restrictions. Sri Lankan residents use this as the simplest structure for small service businesses and consultants.
BOI-Registered Company · Board of Investment Approved Enterprise
Foreign Direct Investment Company
USD 150,000+ minimum investment (varies by sector)
Min. capital
4–12 weeks for BOI approval + company registration
Setup time
Liability: Limited (registered as Pvt Ltd or PLC)
Setup cost: USD 150,000+ investment + BOI registration fees + professional fees
Best for: Foreign investors making significant investments in Sri Lanka. BOI registration provides: tax holidays (up to 5–10 years), customs concessions, streamlined work visa processing, and land lease access. Ideal for manufacturing, IT/BPO, tourism, and large-scale services.
Branch of Foreign Company · Registered Branch of an Overseas Company
Branch Office
None (parent company capital)
Min. capital
2–4 weeks
Setup time
Liability: Parent company fully liable
Setup cost: LKR 20,000–50,000 (registration fees) + legal fees LKR 100,000–200,000
Best for: Foreign companies operating in Sri Lanka without setting up a separate entity. Must register within 30 days of commencing operations. Common for NGOs, foreign banks, and multinational representative offices.
Guarantee Company (Non-Profit) · Company Limited by Guarantee
Non-Profit / Charity
None
Min. capital
2–4 weeks
Setup time
Liability: Members guarantee a nominal amount
Setup cost: LKR 20,000–60,000 + professional fees
Best for: NGOs, charities, professional associations, and non-profit organisations. Can receive international funding and grants. Must register with Registrar of Companies and may also register under the Voluntary Social Service Organisations Act.
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