Since 2003, Healy Consultants Group PLC has assisted our Clients to start their business in Sri Lanka. Our services include i) Sri Lanka business registration ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
Press the link headings below to read detailed, relevant, up to date information.
Advantages and disadvantages
Advantages of Sri Lanka company registration
It is possible to register a limited liability company in Sri Lanka within 2 weeks, with i) two shareholders and ii) one director, who all can be of any nationality. There is also no minimum paid-up share capital required and our Client will not need to travel to complete the engagement.
Sri Lanka offers excellent opportunities for businesses in the Maritime sector due to the below reasons:
The country is located in a geographically favourable location in the Indian ocean. It also well- connected through sea and air routes with most of the European and Asian countries;
Sri Lanka is a major trans-shipping destination for consolidation and de-consolidation of cargoes;
The port of Colombo is the 25th largest container port in the world, according to the World Shipping Council rankings;
The country has a well-developed logistical infrastructure along with available modern maritime facilities.
Disadvantages of Sri Lanka company registration
A Sri Lanka limited liability company requires a company secretary ordinarily residing in the country to complete incorporation. If required, Healy Consultants will supply our Client with secretarial services to comply with this requirement;
Our Clients planning to sell their products in Sri Lanka should expect low earnings: the average purchasing power of local consumers barely amounts to US$190 per month and most of it is spent on housing and food;
Our Clients opening a company in Sri Lanka can pay a fair amount of tax because:
Corporate tax on Sri Lanka limited liability companies is fairly high, at a flat 24% rate on their worldwide earnings, although a reduced rate of 12% applies for eligible activities (see accounting and tax section for further details);
Dividends distributed to both residents and nonresidents are subject to withholding tax at a rate of 10% (unless reduced by a double taxation avoidance treaty);
Healy Consultants recommend our Clients to establish a Sri Lanka LLC rather than a branch office. In addition to corporate tax, Sri Lanka branch companies are indeed required to pay an additional Branch tax levied at 10% on all funds remitted abroad;
Labor tax and social contributions represent on average 23% of an employee’s gross salary, an higher amount than in most other South Asian countries;
For all reasons listed above, the total amount of taxes paid by a business represents on average 56% of its annual earnings, against 40% in other South Asian countries.
The major hindrance to doing business by foreign entrepreneurs in Sri Lanka is majorly due to its inefficient government bureaucracy. As a result, entrepreneurs suffer from i) opaque tender procedures; ii) inconsistent policy changes and iii) poor and inadequate supply of public infrastructural facilities.
Best uses for a Sri Lankan company
Our Clients often choose to establish a Sri Lanka company when expanding in South Asia because government requirements and administrative red tape are less extensive than other South Asian countries. Sri Lanka is indeed ranked as South Asia’s i) best country for the ease of doing business by the World Bank and ii) 2nd least corrupt country by Transparency International;
Sri Lanka is an attractive place to setup manufacturing and agro-processing companies because:
Our Clients’ labor costs will be low. Average monthly wages for local workers are only i) US$104 in agriculture ii) US$150 in the industry and iii) US$186 for service occupations;
Sri-Lanka based businesses engaged in construction, tourism and export activities benefit from a reduced corporate tax of 14%. Foreign entrepreneurs registering a Sri Lanka LLC can also benefit from a tax holiday during four years, provided they make an initial investment of US$190,000 related to agro-processing and fisheries activities;
After registration of their business in Sri Lanka, it will also be relatively easy for our Clients to secure a loan in order to build a factory and acquire manufacturing equipment. Sri Lanka is indeed ranked as the 3rd best place in South Asia for the ease of access to loans, according to the World Economic Forum;
Exporting products from Sri Lanka is convenient as the country is an island and has seven international harbors and excellent port infrastructure, ranked as the best in South Asia by the WEF;