If you are interested in forming a company in Sri Lanka, you need to follow some steps and comply with some legal requirements. Here is a brief overview of the process and the pros and cons of setting up a business in Sri Lanka.
Step 1: Register your company name
You can register your company name online through the Registrar of Companies website. You need to pay a fee of 1000 LKR and the name reservation will be valid for three months. You should check the availability of your desired name before applying. The name registration will take about two days if there are no issues.
Step 2: Incorporate your company
You can incorporate your company online through the eROC system. You need to fill out some forms and upload some documents, such as the articles of association, the consent and certificates of directors and secretaries, and the details of shareholders and share capital. You also need to pay a registration fee based on the authorized share capital of your company. The incorporation will take about three days if there are no errors.
Step 3: Register for taxes and social security
You need to register your company for income tax, value-added tax (VAT), economic service charge (ESC), and nation-building tax (NBT) with the Inland Revenue Department. You also need to register your employees for the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) with the Department of Labour. You can do these registrations online or offline. The registration will take about two days if you have all the required documents.
Advantages of forming a company in Sri Lanka
- You can enjoy various tax incentives and exemptions, especially if you invest in priority sectors such as tourism, agriculture, IT, education, health, etc.
- You can access a large domestic market of over 20 million people and a strategic location for regional trade and connectivity.
- You can benefit from a skilled and educated workforce, low labor costs, and high literacy rates.
- You can leverage the country’s natural resources, biodiversity, and cultural heritage.
Disadvantages of forming a company in Sri Lanka
- You may face some bureaucratic delays, corruption, and red tape in dealing with government agencies and authorities.
- You may encounter some political instability, security risks, and social unrest due to ethnic tensions, civil war, terrorism, etc.
- You may have to deal with some infrastructure gaps, power shortages, and environmental issues that affect the quality of life and business operations.
- You may have to cope with some legal uncertainties, regulatory changes, and policy inconsistencies that affect the business environment and investor confidence.
To form your Sri Lankan company successfully and operate them, you can do it by yourself or there are agents who do it for you hassle-free. I used Simplebooks company to form my first Sri Lankan Private Limited company in 2015. Their service is so amazing and more affordable. Their website itself is more informative and easy to understand.
To open a business bank account, you can open at any bank and all you need is your company formation documents, article of association and director’s seal, signature + secretary seal and signature. I opened my business bank account with Sampath Bank (A Sri Lankan Privately Owned and Operated Bank). Opening a business bank account in Sampath is more easy and hassle-free than opening at other banks.
