- Foreign Company registration (Branch/ Liason/Virtual office, Joint Venture company, 100% owned share company)
- Legal issue
- Income Tax
- Accounts Audit
- Company Secretarial
A Company incorporated outside Sri Lank, which establishes a place of business within Sri Lank need to seek registration with the Registrar of Companies within one month of the establishment of the place of business. Generally approval from the relevant ministry would be required before the registration can be completed
Such a company has the same powers to hold lands in Sri Lanka as if it was a company incorporated in Sri Lanka.
Liaison /Representative Office
A Foreign company may have a Liaison office in Sri Lanka for following purpose:-
• Marketing intelligence, planning and coordinating business promotion activities;
• Technical support and quality control;
• Sourcing of raw material and manufactured products;
• Not to engage in any import, export, trade or investment in Sri Lanka.
Application is generally directed to Ministry of Finance.
Holding & Subsidiary Company:
A company is deemed to be a subsidiary of another company if:
• the other company holds more than half of the nominal value of its equity share capital; or
• is a member of it and controls the composition of its board of directors.
A company is a Holding Company of another company if that other company is its subsidiary
Board of Investment
The Principle law applicable to foreign investment is Board of Investment law No. 4 of 1978 (BOI Act). Board of Investment of Sri Lanka is a major body, which approves foreign investments under Board of Investment law. The Board of Investment is structured to function as a central facilitation point for investors.
The BOI Act provides for two types of investment approvals.
Under Section 17 of the Act, the BOI is empowered to grant special concessions to companies satisfying specific eligibility criteria which are designed to meet strategic economic objectives of the government. The mechanism through which such concessions are granted is the Agreement which modifies, exempts and waives identified laws in keeping with the BOI Regulations. These laws include Inland Revenue, Customs, Exchange Control and Import Control.
Approval under Section 16 of the BOI Act permits foreign investment entry to operate only under the ‘normal laws’ of the country; that is, for such enterprises, the provisions of the Inland Revenue, Customs and Exchange Control Laws shall apply.
For the purpose of granting approvals and incentives, companies incorporated under the Companies Act are treated equally regardless of whether the shareholding is controlled by nationals or non-nationals.
Significantly, when an agreement is signed with the Board of Investment, the specific incentives granted to an eligible company remain valid for the life of the enterprise. The provision and the spirit of the agreement can not be changed by successive governments.
Applicable Taxes for Foreign Companies:
The existing income tax in Sri Lanka is based on the Inland Revenue Act, No. 38 of 2000. An year of assessment is a period of twelve months from the 1st of April of an year to the 31st of March of the immediately succeeding year.
Company income tax is made up of a tax on corporate income and tax on dividend is 15 % of the gross dividends declared by the company. Generally, companies are liable to income tax on its taxable income at the rate of 35 per centum.
If a resident company pays dividend consisting of a qualifying distribution, it is required to pay advance company tax. A credit is given for this advance company tax paid, against company’s final tax liability.