Income tax rate in Sri Lanka for corporate and individual

Different types of taxpayers have in Sri Lanka, and their taxpaying rate is different. In this article, we are trying to discuss about the corporate tax rate in Sri Lanka and the Individual tax rate in Sri Lanka.

(CIT) corporate income tax rate in Sri Lanka:

  • In Sri Lanka the normal tax rate is 28%.
  • The tax rates which are in between 10% to 40% also can be considered as a profitable business for a specific sector.
  •  A Sri Lankan company is a company that is registered and known as a principle company which manages business in Sri Lanka.
  • The companies from Sri Lanka are taxed by the income worldwide whereas the companies which are not Sri Lankan are taxed on the income which is determined by Sri Lanka only.
  • This system is known to be a friendly society, developing society, pension fund, retirement fund, superannuation fund and society fund which can be deemed in the country.
  • The country has a self-examined system for the income tax payments.
  • The income tax is annually filed during November 30th or before this date. This filling system is continuously done after every year end of the assessment. Generally, the assessment year is a period of 1 year which is from 1st April to 31st March every year.
  • The final day of tax liability payment is 30th September which can also be payed on the before date.
  • If there are any post ponded days of payments or if any payments are not payed then there will be penalties.
  • The withholding tax are for payments like dividends and royalties to be payed for non-residents in Sri Lanka.
  • The following are the domestic tax rates in which the rates are reduced to an appropriate tax treaty.
  • Dividends 10%.
  • Royalties 20%.
  • The interest payments for non-residents will not be taken from income tax.
  • Nowadays the term capital gains are not bothered in the income tax of Sri Lanka.
  • In a company, there can be partnership where 20 partners have limited liability for debts in the company.
  • The private and public companies of Sri Lanka are liable to CIT for their global taxable income.
  • The partnership here should have at least 20 partners which have limited liability for debts of the partnership which also treated as a company.
  • The companies which are not Sri Lankan are liable for the CIT in respect of any business, investment or other source to the extent where the income rises.
  • It is stated that CIT rates is based by the income and the institution of income earned.
  • The unit trust and mutual funds are treated as residents’ companies for the purposes of CIT when the unit trusts and mutual funds does not conduct eligible investment business.
  • The meaning of eligible business means the investment comprising predominantly by owing, investing or trading in capital assets, financial instrument and any other similar assets.
  • At the year of 2018 to 2019 the companies have been taxed only in the case under three income tax rates 14%, 40% and 28% as been listed in order to lower tax rate for undertaking where it should be more than 80% for such identified which is considered to be predominant.

As per the recent record in November 2019 there has been a record that Sri Lanka this year in 2019 has the highest record of Income Tax Rate.

The individual income tax rate in Sri Lanka (Personal):

  • The personal income tax is a withholding scheme in Sri Lanka
  • For an individual the income tax rate in Sri Lanka is between 4 percent to 24 percent. The percentage level depends on the level of profits and income earned in a given year of assessment.
  • For the employees it is the duty for an employer to do the requirement of deducting tax under a withholding scheme. This scheme is called “PAYE” which means Pay As You Earn. When a person as a receipt which shows employment in the PAYE subject then it is considered to be a final tax
  • The employers and employees who have given distribution to the Employees Provident Fund (EPF) and Employees Trust Fund (ETF).
  • The minimum contribution should be 8% from the employees and 12% from the employers which is for the case of EPF and 3% from the employers in case of ETF.
  • In Sri Lanka the tax rates are about 15 percent.
  • The personal tax rate is up to 28.08 percent from 2004 to 2016 which always reached the highest where in 2007 the ratings were 35% and the lowest in the record was in 2006 where the ratings were in 15%.
  • In the country the personal income tax rate is collected from individuals through various resources and small business ideas in Sri Lanka.
  •  Some of the resources where the tax is collected are labor, pensions, interest and dividends
  • The revenue records of the personal income tax rate are the most imported view to be seen in the country’s corporate income tax rate. It helps in checking the overall system of the corporate rates.

Related Article you may read: Income Tax Return Sri Lanka


Company Registration Expert Since 2012