Business entities in Sri Lanka
Healy Consultants will assist our Clients with Sri Lanka business setup. There are several ways to do business in Sri Lanka, the most common being the setup of a Sri Lanka limited liability company. A public limited company can also be an attractive vehicle for our Clients willing to raise capital in the country. Foreign companies can alternatively register a branch in Sri Lanka, or a representative office if they do not plan to conduct commercial operations.
The Sri Lanka limited liability company (LLC)
This is the most common business entity in Sri Lanka. Setting up a Sri Lanka LLC requires at least one director and two shareholders, who can be of any nationality. No minimum share capital is required. In accordance with the Companies Act of 2007, article 5, the company owners must however appoint an individual ordinarily residing in Sri Lanka as company secretary. Healy Consultants can provide our Clients with a company secretary, as well as a registered address in Sri Lanka which is also required to complete setup of a company in Sri Lanka.
The Sri Lanka public limited company (PLC)
The Sri Lanka PLC does not require minimum share capital for the incorporation of the company. Only two shareholders and two directors, who are not required to be Sri Lanka nationals, must be appointed. After Sri Lanka company setup, its directors must file annual returns and submit its audited accounts and financial statements every year.
The Sri Lanka branch office
A Sri Lanka branch office can be 100% foreign owned. The scope of operations for this entity will be defined by the parent company. The branch office will have an independent management team and corporate bank account based in Sri Lanka. It must however register with the Ministry of Finance and Planning and, in addition to standard taxes, is also subject to a 10% branch tax levied on profits remitted abroad its parent company.
The Sri Lanka representative office
A representative office is neither allowed to make direct sales nor to conduct productive operations within Sri Lanka. The representative office can be 100% foreign owned but a resident company secretary must be appointed. It must also have a local registered address and a corporate bank account in Sri Lanka.
Table of comparison between Sri Lanka entities
|How long to setup the Sri Lanka legal entity?||7 weeks||8 weeks||8 weeks||8 weeks|
|How long to open corporate bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Minimum paid-up share capital?||US$1||US$1||N/A||N/A|
|File annual tax return?||Yes||Yes||Yes||Yes|
|Corporate bank account?||Citibank||Standard Chartered||HSBC||Bank of Ceylon|
|Does our Client need to travel?||No||No||No||No|
|Resident director/representative required?||No||No||Yes||Yes|
|Minimum directors allowed?||1||1||1||1|
|Resident company secretary required?||Yes||Yes||N/A||N/A|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Standard corporate tax rate?||28%||28%||28%||N/A|
|Annual financial statements required?||Yes||Yes||Yes||Yes|
|Statutory audit always required?||No||Yes||Yes||Yes|
|Allowed to issue sales invoices in Sri Lanka?||Yes||Yes||Yes||No|
|Allowed to sign contracts with Sri Lanka entities?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office in Sri Lanka?||Yes||Yes||Yes||Yes|
|Can own equity in other Sri Lanka companies?||Yes||Yes||Yes||No|
|Total Sri Lanka business setup costs in Yr. 1||US$11,550||US$13,550||US$13,450||US$11,300|
|Subsequent annual costs (incl. accounting and tax fee)||US$7,450||US$9,450||US$7,450||US$1,100|
|Sample engagement fee invoice|