Frequently asked questions

Foreign Exchange

Are there foreign exchange controls in Sri Lanka?

Yes, foreign exchange transactions are regulated by the Department of Foreign Exchange of the Central Bank of Sri Lanka under the Foreign Exchange Act No. 12 of 2017, the regulations and directions issued thereunder.

  • Sri Lanka Rupees/assets can be converted into foreign currency and freely transferred/remitted outside Sri Lanka if the remittance is for a current transaction or a permitted capital transaction 
 
  • Persons holding foreign currency accounts in banks in or outside Sri Lanka can freely transact with foreign currency held in such accounts. 
 
  • Restrictions pertaining to the remittance of foreign exchange may be imposed by the relevant Minister where the Monetary Board advises the Minister of a potential threat to the financial stability of Sri Lanka.

The following are considered current transactions: 
  1. payments due in connection with foreign trade, other current business, including services, and normal short-term banking and credit facilities; 
  2. payments due as interest on loans and as net income from other investments; 
  3. payments of moderate amount for amortization of loans or for depreciation of direct investments; and 
  4. moderate remittances for family living expenses
  A capital transaction is an international transaction (not being a current transaction) which necessitates a transfer of foreign exchange into or from Sri Lanka. Capital transactions specifically permitted by regulations issued under the Foreign Exchange Act are generally referred to as “permitted investments” or “permitted capital transactions”. Special permission may be sought from the Monetary Board of the Central Bank in respect of a capital transaction which is not recognized as a permitted investment

Yes, proceeds of permitted investments (i.e. permitted capital transactions) are repatriable out of Sri Lanka. Where a particular investment is required under applicable law to be routed through an Inward Investment Account opened by the investor, the proceeds of such investment must also be credited into and remitted through the same Inward Investment Account.

Yes, the Foreign Exchange Act No. 12 of 2017 of Sri Lanka applies to investments or persons engaged in business in the Colombo Port City.

Intellectual Property

Trademark registration in Sri Lanka is governed by the Intellectual Property Act No. 36 of 2003.

  1. Name and Address of the applicant
  2. The goods/services for which the trademark is being used
  3. Print of the trademark, if it consists of a device 
  4. A Power of Attorney (if the trademark is to be filed through an agent)

No

The steps involved in the registration of a trademark in Sri Lanka are as follows:  
  1. Conduct of a search of the records of the National Intellectual Property Office (NIPO) of registered trademarks;
  2. Filing the trademark application;
  3. Examination of the trademark application by the NIPO;
  4. If the trademark is accepted, payment of the publication fee; In the event the registration of the trademark is refused,  the NIPO will hold an ex-parte inquiry.  
  5. Once the trademark is published in the government gazette, a period of three months is given for any opposition to be filed by a third party.
  6. If there is no opposition, the registration fee may be paid. In the event of any opposition, the NIPO will hold an opposition inquiry
  7. Registration of the trademark.

Trademark registration in Sri Lanka usually takes 4 -6 years

There are no provisions to register copyrights in Sri Lanka

Once a trademark is registered, such mark can be renewed within a period of one year from the expiration of each period of ten years, by making an application to renew such mark.

A change of name or  address or an assignment of a trademark may be made by  filing the relevant application form together with documentary evidence and the prescribed fee at the NIPO

Real Property

No.  In terms of the Land (Restrictions on Alienation) Act No. 38 of 2014, non-nationals, foreign companies and companies incorporated in Sri Lanka with a direct or indirect foreign shareholding of 50% or more, are not permitted to acquire land in Sri Lanka after 01st January 2013, subject, however to the exemptions provided in the said Act.

A document relating to immovable property in Sri Lanka must be executed in accordance with the provisions of the Prevention of Frauds Ordinance No. 07 of 1840 of Sri Lanka (as amended) and the Notaries Ordinance No. 01 of 1907 of Sri Lanka (as amended) – i.e.  such document must be executed in writing, in the presence of a notary public and two witnesses being present together at the same time and place.

The stamp duty payable in respect of an instrument depends on the type of instrument executed – 
  1. Transfer of property – approximately 4% of the market value of the property, as determined by the relevant provincial council
  2. Gift of property – approximately 3% of the market value of the property, as determined by the relevant provincial council. This is also dependent on when the donor acquired the property – i.e. prior to March 1977 or subsequent to March 1977. 
  3. Lease of property – Approximately 1% of the total lease rental for the first 20 years of the lease. 
  4. Mortgage of property (immovable and movable) – Approximately 0.1% of the principal sum to be secured by the mortgage.
  Deed of Exchange –
  • if both properties are co-owned and are of equal value – Rs. 50/-. 
  • if both properties are co-owned but are of different values – approximately 4% of the difference of the market value of the two properties, as determined by the relevant provincial council. 
  • if is the properties are not co-owned but are of equal value – approximately 4% of the market value of one of the properties, as determined by the relevant provincial council.
  • if the properties are not co-owned and are not of equal value – approximately 4% of the market value of the higher valued property, as determined by the relevant provincial council

Yes. In terms of the Land (Restrictions on Alienation) Act No. 38 of 2014, foreigners may purchase condominium properties in Sri Lanka, provided that the entire value shall be paid up front through an inward foreign remittance prior to the execution of the relevant deed of transfer.

Tax

Yes. Sri Lanka has entered into double taxation treaties with various countries. Australia, Canada, China, India, Germany, the United Kingdom, the United States of America and Vietnam are a few among them.

Yes, the Inland Revenue Act provides for withholding taxes on different types of payments.   
  • a withholding tax referred to as the Advance Personal Income Tax should be deducted from the salaries paid to employees by an employer at the rates specified in the Inland Revenue Act.
 
  • withholding tax referred to as the Advance Income Tax should be withheld from the payment of the following:
  1. dividend at a rate of 15%, 
  2. interest or discount paid at the rate of 05%, 
  3. rent payments made to a resident person exceeding Rs. 100,000 at the rate of 10%, and
  4. all other payments including royalty, that has a source in Sri Lanka at the rate of 14%. 
 
  • a withholding tax at the rate of 14% of the payment will be required to be withheld where a person pays a service fee or an insurance premium with a source in Sri Lanka to a non-resident person.
 
  • a withholding tax of 5% of the payment will be required to be withheld by the payer of the payments made as service fees which has a source in Sri Lanka and exceed Rs. 100,000, which includes, inter alia – 
  1. for teaching, lecturing, examining, invigilating, or supervising an examination.
  2. as a commission or brokerage to a resident insurance, sales, or canvassing agent; and
  3. for services provided by an individual in the capacity of independent service provider such as doctor, engineer, accountant, lawyer, software developer, researcher, academic or any individual service provider.

The following are the taxes Companies usually have to pay in Sri Lanka – 
  1. income tax charged under the Inland Revenue Act No. 24 of 2017 at the rate of 30% of the taxable income.
  2. the Value Added Tax charged under Value Added Tax Act No. 14 of 2002 charged at 15% on the value of goods or services supplied or imported. 
  3. the Social Security Contribution Levy charged under the Social Security Contribution Levy Act, No. 25 of 2022 as charged at 2.5% of the liable turnover.