Foreign direct investment in Sri Lanka

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Foreign Direct Investment in Sri Lanka

Being Sri Lanka a prominent country where now a day foreign direct investment in Sri Lanka volume is higher than previous year. You have noticed majority of foreign investors comes from India.

Remote Direct Speculation (FDI) has been utilized by creating nations as a device to tackle their monetary issues in the current past. The Sri Lankan governments streamed distinctive systems to advance FDI subsequent to accomplishing independence in 1948.

As per the examination remote direct speculation (FDI) has been beneath desires in 2010 and it has diminished in late two years while FDI net inflows % of Gross domestic product was significantly diminished. What’s more principle FDI Sources of Sri Lanka has changed the above period.

FDI in Sri Lanka comes in three sorts . Even − In flat FDI, the organization does likewise exercises in abroad as at home.

Vertical − In vertical FDI diverse sorts of exercises are done in abroad than locally. If there should be an occurrence of forward vertical FDI, the FDI conveys the organization closer to a finished result and in the event of in reverse Vertical FDI, the combination backpedals towards crude materials.

Combination − In this sort of FDI, the objective is to get a disconnected business abroad. It requires defeating two obstructions – one, entering a remote nation and the other one is working in another industry.

Outside Foreign Direct Investment in Sri Lanka interest has been expanded by 76 USD Million in the principal quarter of 2017. Outside Direct Interest in Sri Lanka found the middle value of 134.03 USD Million from 2001 until 2017, achieving an untouched high of 636 USD Million in the final quarter of 2016 and a record low of 20 USD Million in the second quarter of 2001

Protected Assurance for Outside Venture

Respective venture understandings upheld by established certification gives insurance to outside interest in Sri Lanka. Under article 157 of the nation’s constitution, the understanding appreciates the compel of law and no authoritative, official, or managerial move can be made to contradict the arrangements of a reciprocal speculation assertion with the exception of on grounds of national security.

As indicated by the World Bank, FDI inflows have arrived at the midpoint of 1.2% of Gross domestic product in the course of the most recent five years, well underneath match developing markets, including Vietnam (4.9%), Malaysia (3.1%), and Indonesia (3%). In South Asia, Sri Lanka likewise stays underneath neighboring India and Bangladesh, with 1.7% and 1.4%, separately.


The BOI supports extend under Areas 16 and 17 of the BOI Law, which was sanctioned in 1978 and has been revised six times since. Segment 16 relates to outside ventures with no financial concessions and a base speculation measure of $250,000. Area 17 engages the BOI to give ventures exclusions from inland income, trade control and Traditions obligation.

The BOI’s essential philosophy in the past has been a variety of motivations to help draw in venture. This incorporate exclusion from corporate pay charge, Traditions obligations, esteem included assessment, and a ports and air terminal improvement require. Exclusions are point by point particularly relying upon the range of speculation and division of the economy. Many consider these to have been very powerful in conveying new arrangements to the nation, while others have referred to them as a factor in the nation’s low expense base.


A deemed dividend tax of 15% is payable by any resident company in any tax year if the said company has, in the preceding tax year.

The tax base for the 15% deemed dividend tax is the book profits of the company reduced by the aggregate of the CIT payable by that company for that tax year, the cost incurred by the company in that tax year in the acquisition of any land or any capital asset, and any notional profit computed on the basis of a revaluation of any capital asset included in such book profit and increased by the aggregate of the allowance for depreciation deducted in respect of any capital asset acquired in that tax year and any notional loss computed on the basis of a revaluation of any capital asset included in such book profit.


In the case of a public corporation, where not less than 75% of the capital is provided by the government (other than via a loan), a tax of 25% of after deduction of CIT.


Where profits of a non-resident company are remitted in a tax year, a remittance tax of 10% of the remittances is payable.


No local income tax is applicable in FDI in Sri Lanka issue.


As a creating nation, Sri Lankan governments streamed distinctive methodologies’ to build FDI streams to subsequent to accomplishing freedom in 1948. FDI utilized as a device of financial advancement and answer for monetary issues which confronting by governments. Common ethnic issue was the fundamental boundary to get fascination from outside financial specialists after 1980. While the finish of the common war prompted desires of substantially higher FDI streams to Sri Lanka.

There are many elements that need to get draw in FDI. It is essential to guarantee an alluring speculation condition. Predictable macroeconomic arrangements and government policies, great administration, monetary solidness, assurance of property rights, control of law and nonappearance of debasement are among the conditions required to draw in FDI (foreign direct investment in Sri Lanka) . Consistency and consistency in political steadiness and monetary approaches are preconditions to draw in FDI.

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