Sri Lanka legal and accounting and tax considerations in 2024
- Corporate income tax rate in Sri Lanka is 24%. Business involved in i) construction ii) tourism and iii) export activities benefit from a reduced rate of 12%. Corporate tax returns must be filed by 30th November and are to be paid quarterly;
- The standard VAT rate in Sri Lanka is 12% filed on a quarterly basis. All companies with annual sales over US$92,000 are required to obtain a VAT registration number;
- Investors do not pay capital gains tax in Sri Lanka when selling shares;
- Annual audit is compulsory for all entities incorporated in Sri Lanka;
- Loss can be carried forward during up to 5 years, for up to 35% of a year’s taxable income;
- Payments remitted abroad are subject to withholding tax, at a rate of i) 10% on loan repayments and ii) 15% for dividends remitted to a shareholder;
- Branches are furthermore subject to an additional branch tax on remittances to their parent company, levied at a 10% rate;
- Employers must remit contributions to their employees’ Social Security accounts, representing an average of 15% of their employees’ gross salaries;
- Nation Building Tax on sales must be paid at a 2 % rate on all sales over US$ 23,000 made by i) importers ii) manufacturers iii) service providers and iv) wholesalers and retailers;
- According to the Inland Revenue Department, Sri Lanka has signed double tax treaties with 38 countries and Investment Protection Agreements with 28 countries thereby making it one of the safest countries in the world to do business;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
