Starting a Business in

Sri Lanka

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Sri Lanka. It examines the procedures, time and cost involved in launching a commercial or industrial firm with between 10 and 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed in June 2016.

Compare Sri Lanka to 189 other economies.

  • No. Procedure Time to Complete Associated Costs

    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

    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

    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

    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.