Before we head out to discuss our main topic, it is essential to know about the country. Sri Lanka is beautiful island country in South Asia. It is highly recognized for its artistic statues, mythological culture and historical displays. In past decades Sri Lanka failed to show any significant remarks that is related to business and economy growth. However, considering the recent strategies and new adjustments of the system, helps to improve Sri Lanka’s economy and business growth.
Because of the new change in the system, more foreign investors are attracted to set up business in the country. In today’s date, it is considered that Sri Lanka is currently ranked 109th out of 189 countries on its ‘Ease of Doing Business (index according to The World Bank). The government of Sri Lankan takes necessary steps to encourage foreign business relationships, trade and entrepreneurship.
If you want to start a business in Sri Lanka, it is recommended to arrive with a solid strategy and with some capital to invest. Setting up business in Sri Lanka is quick, and straight-forward. From previous acts and experiences, it is stated that the registration is best done in-person than performed online. This article will give you a brief and resourceful idea about what it takes to start your own business in Sri Lanka.
Types of Companies Available for Business Registration
There are various types of corporate business that that can be setup in Sri Lanka. The following business are shown below–
- Public Limited Company (PLC)
- Offshore Company
- Overseas Company
- Sole Proprietorship
- Limited Liability Company (LLC)
Steps and Methods Business Registration in Sri Lanka
The process of business registration in Sri Lanka is simple and straightforward. it just takes around ten days to complete the entire process from start to finish. The steps of company registration are shown below–
- The first step is to check for company name availability. The name can be searched online and kept reserved at Registrar of Companies website. This company name is kept reserved with validity for three months from the date of approval. It costs about 1,000 Sri Lankan rupees to register a company name. It takes about two days to complete the process.
- Next, the company secretary and directors come in action as they must sign a consent form. This is performed in person and takes about a month. According to law, every organization must have a company secretary, who will deal with the company registration issue. However, the local consultancy company can provide a company secretary for monthly fees between 30,000 to 45000 Sri Lankan Rupee.
- Submit the following forms to 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 (AoA) is required.
It takes about 3 days to complete the entire procedures. The cost is a flat fee of SLR 15,000 for Form 1 and a flat fee of SLR 1,000 along with 12% VAT for other forms.
- According to government rules a company needs to publish a public notice within 30 days of business registration. It is essential that proper advertisement and branding of your company is made. Thus, public notice is published all over the country for the company’s incorporation at various newspapers and Government Publication Bureau. The newspaper company will take two weeks to publish a public notice. The publication process will cost about SLR 7,000.
- The next important step is to obtain a Tax Identification Number (TIN). It can be obtained from the Inland Revenue Department in Sri Lanka. The process can also be done in person and is considered to be an essential step for company registration. There is no charge applied for TIN, and it just takes one day to get the authorized number.
- It is also compulsory to register for Value Added Tax (VAT) with the VAT Registration Branch of the Inland Revenue Department. The process takes just one day to be completed and its totally free.
- Obtain an EFP Number from the Department of Labor. The companies are asked to register here to pay gratuities to the workers and employees of more than five years through Sri Lanka’s Central Bank. This process also takes just one day and is free of cost.
Business Registration Sri Lanka – Related Legal Issues, Obligations and Responsibilities
Department of Inland Revenue of Sri Lanka mainly sets the tax structure for individuals or business/companies. Depending on net income an individual or company need to submit Tax. Sometimes the Inland Revenue Board can even free the tax (depends on situation).
The Institute of Chartered Accountants formulated a code of corporate governance. They use it to inspect the financial procedures of the company. The code, display the fact that there should be a transparent policy on executive and director compensation. It is mandatory for all types of companies in Sri Lanka to go through corporate governance standards.
As per Sri Lankan labor law, an employee is asked to take 14 days of paid annual leave after serving a year continuously at any respected company. Workers or employees are given a weekly holiday of one and a half days. In Sri Lanka, there is no pension scheme for employees in the private sectors. However, all sort of companies is bound to pay gratuities to employees or workers who are continuously working in companies for five years.
Other Facts and Foes to Know About Business Registration Sri Lanka
There are many consultancy company/agencies in Sri Lanka. Most of the companies have authorized documentation. The agency/consultancy company are available to assist foreign investors who are looking forward for setting up business in Sri Lanka. The consultancy /agencies company guide investors with appropriate information which will help them set up business. There are many robust entrepreneur communities with loads of information and solutions. Here are some of the options that can be followed–
- A guide for entrepreneurs is created by the Sri Lankan Central Bank. This guide explains each of the steps that must be taken according for setting up business.
- The Government Information Centre of Sri Lanka will eventually guide the business entities through the registration process and solve out any issue the business companies come up with.
- The Department of Labor will educate the business entities on labor legislation, statistical information, authorized forms, current laws and news.
- The Institute of Chartered Accountants will provide documentation on business structures.
You might face small and big problems while initiating business registration in Sri Lanka or in any other foreign location. Do not worry! global business advisory firms like S & F Consulting Firm Limited is always there 24/7 to provide you with the best solutions that you need for your concerns. These company has helped many to achieve their goals in forming a business company in various destination around the globe. Well, now you can check the income tax rate in Sri Lanka for corporate and individuals. Also, you may want to know also about small business ideas in Sri Lanka.