Regulations

Company Registration and Company Law

Companies Act No. 7 of 2007 is the applicable Law to incorporate Limited Liability Companies or registration of overseas companies in Sri Lanka. Minimum of one Director and Shareholder are required to incorporate a Limited Liability Company in Sri Lanka. There is no restriction to become Company Director by a non-citizen individual but, limitation has been gazetted to become a non-citizen person as Company Shareholder on certain business activities carry out in Sri Lanka.

Foreign Exchange Act

Foreign Exchange Act, No. 12 of 2017 is the Law in Sri Lanka to provide for the promotion and regulation of Foreign Exchange in Sri Lanka and such Regulations are made under the Foreign Exchange Act by the Minister of National Policies and Economic Affairs on 17th November 2017.

Board of Investment Law

The BOI is structured to function as a central facilitation point for investors in Sri Lanka. Board of Investment is authorized to enter in to agreements with any Enterprise under the Section 16 and Section 17 of the B.O.I. Law. B.O.I. shall have power under section 17 of the Law to provide benefits to the Investors such as Customs Ordinances (Chapter 235), The Exchange Control Act etc. B.O.I. facilitates Visa for foreign Investors/ Shareholders, Directors and Employees under the category of Entry Visa, Residence Visa, Multiple Entry Business Visa and Special Residence Visa.

Strategic Development Projects Act

Strategic Development Projects Act, No. 14 of 2008 Certified on 29th February, 2008 is to promote strategic development projects in Sri Lanka and provide almost all tax benefits on such projects. The Board of Investment of Sri Lanka shall identify in consultation with the relevant line Ministries, any proposed project as a Strategic Development Project.

Bank - Inward Investment Account (IIA)

Any person resident outside Sri Lanka engages in capital transactions in Sri Lanka which requires remittance of foreign exchange into Sri Lanka to invest, acquire or hold all classes of shares or an entitlement to shares (including any subsequent shares devolving on such investor by virtue of a corporate action by the issuer, exercise of a right, entitlement or conversion) issued by Companies incorporated in Sri Lanka under the Companies Act, No. 7 of 2007 shall be made through an Inward Investment Account opened and maintained in any foreign currency designated by the Central Bank of Sri Lanka or Sri Lanka Rupees with a licensed commercial bank as an authorized dealer.

Land (Restrictions on Alienation) Act

Land (Restrictions on Alienation) Act, No. 38 of 2014 and subsequent amendments to the Act made provisions to stipulate restrictions on the transfer, lease or mortgage of lands situated within Sri Lanka to Foreigners, Foreign Companies and Companies incorporated under Companies Act No. of 07 of 2007 with foreign shareholding and specify circumstances where the exemptions are granted.

Taxation

Income Tax, Value Added Tax, Customs Duty, Excise Duty etc are the main taxes imposed by the government of Sri Lanka and these taxes are collected and administrated by the Department of Inland Revenue, Sri Lanka Customs and Excise Department of Sri Lanka. The Government of Sri Lanka recently abolished certain taxes imposed as indirect taxes and reduced Value Added Tax rate to create vibrant business environment in Sri Lanka.