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Ease of Doing Business in

Sri Lanka

Sri Lanka Download Profile (1749.7KB, pdf)
Region South Asia
Income Category Lower middle income
Population 20,966,000
GNI Per Capita (US$) 3,800
City covered Colombo

190

1

DB 2017 Rank

1

100

DB 2017 DTF (% points)

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Topics DB 2017 Rank DB 2016 Rank info_outline Change in Rank DB 2017 DTF (% points) info_outline DB 2016 DTF (% points) info_outline Change in DTF (% points) info_outline
Overall 110 109 down
1
58.79 58.14 down
0.65
Starting a Business 74 95 up
21
87.52 84.98 up
2.54
Dealing with Construction Permits 88 83 down
5
69.31 69.25 up
0.06
Getting Electricity 86 82 down
4
71.12 70.82 up
0.30
Registering Property 155 154 down
1
46.76 46.76
-
Getting Credit 118 109 down
9
40.00 40.00
-
Protecting Minority Investors 42 51 up
9
63.33 60.00 up
3.33
Paying Taxes 158 157 down
1
53.16 53.18 down
0.02
Trading across Borders 90 89 down
1
70.70 70.70
-
Enforcing Contracts 163 163
-
39.31 39.31
-
Resolving Insolvency 75 76 up
1
46.73 46.40 up
0.33

Positive=Doing Business reform making it easier to do business. Negative=Change making it more difficult to do business.

DB 2017 Rank: 74

DB 2016 Rank: 95

Change in Rank: up21

DB 2017 DTF (% points): 87.52

DB 2016 DTF (% points): 84.98

Change in DTF (% points): up2.54

Standardized Company
Legal form: Private Limited Liability Company
Paid-in minimum capital requirement: LKR 0
City: Colombo
Indicator Sri Lanka South Asia OECD high income
Procedure – Men (number) info_outline 7.0 8.1 4.8
Time – Men (days) info_outline 9.0 15.4 8.3
Cost – Men (% of income per capita) info_outline 12.2 13.4 3.1
Procedure – Women (number) info_outline 7.0 8.2 4.8
Time – Women (days) info_outline 9.0 15.6 8.3
Cost – Women (% of income per capita) info_outline 12.2 13.4 3.1
Paid-in min. capital (% of income per capita) info_outline 0.0 0.2 9.2
  • No. Procedure Time to Complete Associated Costs
    1

    Reserve a unique company name

    Agency: Registry of Companies

    Searching for a unique company name can be done online via the website of the Department of the Registrar of Companies (www.drc.gov.lk). The company name reservation is valid for 3 months.
    2 days LKR 1,000 + 11% VAT
    2

    The company secretary and director sign a consent

    Agency: Company Secretary

    According to Article 221(1) of the Companies Act No. 7 of 2007, every company shall have a director and a secretary.

    The Company Secretary must be hired before incorporation because one of the requirements to incorporate is a consent form that the Company Secretary must sign saying he/she will be the secretary for the newly formed company -- Form 19: Company Secretary Details. The company director must sign Form 18: Company Director Details.

    There is no specific fee schedule. The fees vary from firm to firm, and are generally based on a quarterly retainer. The quarterly charges in the region vary between of USD$ 100 - 150 for private companies but some firms may charge up to USD 1000 annual fee for acting as a Company Secretary. LKR 10,000-15,000 is usually paid per month, so per quarter the amount ranges between LKR 30,000 - 45,000.
    1 day see procedure details
    3

    Register at the Department of the Registrar of Companies

    Agency: Registry of Companies

    The company must submit the following documents to the Department of the Registrar of Companies:
    • Form 1 – Registration of a company
    • Form 18 – Consent and certificate of director
    • Form 19 – Consent and certificate of secretary
    • Two copies of Articles of Association

    A company may either adopt the standard set of Articles of Association in Table A of the Companies Act of Sri Lanka or draft its own Articles of Association. Professional charges are higher for drafting new Articles of Association than for adopting the standard text.

    According to the new Companies Act, notaries are no longer required to witness the signing of the articles of association, the common seal is no longer required, and the company no longer needs to notify the registrar regarding the particulars of the Principal Directors and the location of the registered office within 14 days of incorporation.

    Registrar of Companies charges a flat fee of LKR 15,000 for Form 1, and LKR 1,000 for Forms 18 and 19 and the Articles of Association, with total subject to 11% VAT. The Certificate of Incorporation is typically received in about 3 days.
    2 days LKR 15,000 as the registration fee for Form 1 LKR 1000 plus 11% VAT charged for each Form 18, 19 and the Articles of Association
    4

    Give public notice of incorporation

    Agency: Daily Newspapers and Government Publication Bureau

    According to Section 9 of Sri Lanka’s Companies Act No. 7 of 2007 and section 3(a) of the Gazette Notice No. 1566/32 dated 12/09.2008 public notice must be given within 60 days of the incorporation of a company. The notice of incorporation specifying the name of the company, registration number, date of incorporation, and address of the registered office should be published in the Government Gazette and in any daily newspaper in three languages: English, Sinhala and Tamil. The proof of publication should then be filed with the Registrar of Companies. The newspaper publications once handed over with the payment which depends on the size of the Notice, will appear within 3-4 days. The publication in the Gazette will appear within 2 weeks of submitting the request with the payment. The Registrar of Companies accepts a copy of the receipt issued by the Government Printer as proof of publication.
    3 days LKR 7,000
    * 5

    Register with the tax authorities and obtain a Tax Identification Number (TIN) from Taxpayer Services Unit of Inland Revenue Department

    Agency: Inland Revenue Department

    The applicant or an authorized representative of the applicant must be physically present at the Taxpayer Services Unit of Inland Revenue Department to pick up and complete the application for a Taxpayer Identification Number (TIN) number with supporting documents including a copy of Form 1, Certificate of Incorporation and Articles of Association.
    1 day (simultaneous with procedure 4) no charge
    * 6

    Register for VAT with the Inland Revenue Department VAT Registration Branch

    Agency: Inland Revenue Department

    To obtain permanent VAT registration, the applicant must submit documents proving turnover of LKR 3,750,000 per quarter or LKR 15,000,000 per year according to the Value Added Tax Act No. 14 of 2002. On 1st January 2015 the general rate of VAT was reduced to 11%, from previous 12%.
    1 day (simultaneous with previous procedure) no charge
    * 7

    Register with the Department of Labor and obtain the EPF number

    Agency: Department of Labour and the Central Bank of Sri Lanka

    Companies must register with the Department of Labor to obtain the Employees Provident Fund (EPF) registration number. The fund is a government-owned and maintained by the Central Bank. No separate registration is required to register with the Employees Trust Fund (ETF). ETF uses the same EPF number for their monthly contributions. Companies must also pay gratuities to employees that have been employed for more than 5 years. The gratuity provisions do not apply to companies that have fewer than 15 employees. There is no pension scheme for private sector employees. Businesses that engage in activities of a dangerous nature should obtain special Factories Ordinance checkups.
    1 day (simultaneous with procedure 4) no charge

    * Takes place simultaneously with previous procedure.