Sri Lanka

Starting a Business in

Sri Lanka

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.  It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income (GNI).

The information appearing on this page 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 183 economies. The most recent round of data collection for the project was completed in June 2011.

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • City: Colombo

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No. Procedure Time to Complete Associated Costs
1 Apply for approval name

The reservation is valid for 3 months.
2 days LKR 350 + 12% VAT
2 Register at the Companies Registry

A company may draft or adopt the standard set of articles of association in Table A of the Companies Act of Sri Lanka. Professional charges are higher for drafting new articles of association than for adopting the standard articles.

The articles of association must be submitted in duplicate to the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar General of Companies is required for the articles of association. According to the new Companies Act, notary publics are no longer required to witness the signing of the articles of association.

A flat fee of LKR 8500 as the registration fee for Form 1, and LKR 350 + 12% VAT is charged of the other two forms 18 and 19 and the articles of association. The certificate of incorporation will be received in about 3 days.

Under the new Companies Act, it is no longer required to confirm the principal directors and the situation of the registered office of the company within 14 days of incorporation. Moreover, the common seal was rendered optional.
2 days LKR 8500+ 12% VAT for registration fee (form 1) + LKR 350 + 12% VAT for each of the forms: 18, 19 and the articles of association
3 Register with tax authorities to obtain a TIN

The applicant or an authorized representative of the applicant must be physically present at the Inland Revenue Department to pick up and complete the application for a TIN number. The taxpayer identification number (TIN) and the VAT registration number (temporary) can be obtained in a day. To obtain permanent VAT registration, the applicant must submit documents proving turnover of LKR 500,000 over 3 months. This is done along with income tax registration. The procedure takes 1–3 days.
1 day no charge
4 Register with Department of Labor to obtain EPF and ETF registration

Companies must register with two funds, the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF). Both funds are government-owned and maintained by the Central Bank. To register with these funds, the employer must visit the Ministry of Labor and complete relevant forms. 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.

The issuance of ETF and EPF numbers may sometimes take 4–6 months. However, a number is assigned to the company upon application. Accordingly, the company has fulfilled its obligation and may remit monies to the department for ETF and EPF registration under the assigned number.
1 day to file and approximately one month for the ETF and EPF numbers to be issued no charge
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