Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, the information provided below cannot be considered as comprehensive or deemed to constitute specific legal advice.
Yes we tax in Sri Lanka
New tax reform: No specific information
New tax treaties: No specific information
Local tax advisors
No specific information on the local tax advisors.
Website Tax administration: Click here
There is no definition of Permanent Establishment under the domestic tax law.
Resident companies are taxed on their worldwide income (« worldwide principle »). However, non-resident companies are only taxed on their revenues derived from Sri Lanka sources (« source principle »).
Entities are considered to be resident for tax purposes in Sri Lanka if their registered office, or their place of management & control is in Sri Lanka.
Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 28%.
Non-taxable income includes the following:
- Dividends received from qualifying participations
- Certain capital gains deriving from qualifying participations
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
- Fines and penalties
- CIT and similar taxes (including foreign withholding taxes)
Carry forward : Yes indefinitely, but some restrictions may apply.
Carry back: No
Companies should submit the tax return annually before the 30 November of the following year.
Annual tax returns are established by the company on a self-assessment system.
Companies shall pay quarterly advance payments on 15 August, 15 November of the current year and 15 February and 15 May of the following year; and the balance must be paid before 30 September of the following year (in the case where fiscal year coincides with calendar year).
Whithholding Taxes (payment to foreign companies)
The local tax rates in Sri Lanka are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 10% of the gross amount.
The general rate of WHT on interest is 20%.
The general rate of WHT on Royalties is 20%.
The general rate of WHT on management fees is 20%.
The general rate of WHT on technical services is 20%.
Generally, there is no tax on capital gains.
Standard VAT tax rate is 11%
Zero-rated supplies include, subject to certain conditions:
- exports of goods;
- International Passenger transportation.
Exempt supplies include, subject to certain conditions:
- Certain financial services
- Training and education
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
In case where for a tax period, Input VAT exceeds Output VAT, certain non-resident companies (which are not required to register and incur Sri Lanka-VAT in the course of their business activities in Sri Lanka) may apply for a refund under the same conditions than resident companies.
No other specific information of VAT in Sri Lanka.
The general statute of limitation is 4 years starting at the end of the year in which the tax return had to be filed.
The statute of limitation could be extended without limitation for negligent tax fraud and for wilful tax fraud.
There is foreign exchange control in Sri Lanka. Income and capital could be repatriated provided that certain requirements are fulfilled.
There are thin capitalization rules in Sri Lanka. The interest derived from loans between related parties may not be deductible in case where interest exceeds some ratios.
Do not hesitate to share your experience in Sri Lanka with us in the comments below. Any comments are welcome !