Business Setup for Expats in Sri Lanka (2026)

Foreign nationals can establish and own businesses in Sri Lanka, but the correct process depends on the business activity, level of foreign ownership, investment amount and whether the founder intends to live and work in Sri Lanka.

Before transferring funds or registering the company, confirm the foreign-ownership rules, sector licences, banking route and visa requirements.

Can an Expat Own 100% of a Sri Lankan Company?

Many sectors allow 100% foreign ownership. These commonly include IT, software development, BPO, consultancy and other activities that are not specifically restricted.

However, professional licences and industry approvals may still be required even where 100% foreign ownership is permitted.

Foreign investment is generally limited to 40% in sectors including:

• growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices;
• mining and primary processing of non-renewable resources;
• industries using local timber;
• deep-sea fishing;
• mass communication;
• education;
• freight forwarding;
• travel agencies;
• shipping agencies; and
• goods subject to internationally determined export quotas.

The BOI may approve foreign ownership above 40% for a qualifying project.

Foreign investment is not permitted in pawnbroking or coastal fishing. Retail trade is excluded where the foreign capital contributed is below USD 5 million.

Step 1: Confirm the Business Activity

The company’s activities should be reviewed before incorporation.

Tourism, education, construction, finance, telecommunications, healthcare, shipping and other regulated sectors may require approval or registration from the relevant government authority.

BOI approval is not compulsory for every foreign-owned company. It becomes particularly relevant where:

• foreign ownership above the normal limit is requested in a restricted sector;
• the project requires BOI facilities or approvals; or
• the investment may qualify for incentives or investor services.

Step 2: Incorporate a Private Limited Company

A private limited company is normally registered through the Department of the Registrar of Companies’ eROC system.

The incorporation documents generally include:

• Form 1;
• Form 18 for each director;
• Form 19 for the company secretary;
• Articles of Association; and
• identification and supporting documents for foreign directors and shareholders.

The company must also maintain a registered office in Sri Lanka and appoint a company secretary who is eligible and registered under the applicable Registrar of Companies requirements.

Current Registration Fees

The July 2026 fee schedule charges separate amounts for company registration, name approval and documents submitted for registration.

For example:

• private limited company registration: LKR 5,200;
• company-name approval: LKR 2,600; and
• registration of another required document: LKR 2,600.

These amounts exclude VAT. The final government cost depends on the number of directors, forms and documents filed, so a fixed total of LKR 13,000–16,000 should not be quoted.

Step 3: Complete Beneficial Ownership Filing

From 30 March 2026, newly incorporated companies must complete the separate beneficial-ownership process.

Following incorporation and payment of the incorporation fees, the company must submit:

• Form BO5 for the authorised person; and
• Form BO1 for the beneficial-owner information.

These filings are completed through the Registrar of Companies’ beneficial-ownership portal rather than through the normal eROC incorporation workflow.

Step 4: Route Foreign Investment Correctly

Foreign equity investment should generally be remitted through an Inward Investment Account, or IIA, maintained with a licensed commercial bank.

Investment income and capital proceeds should normally be credited through the relevant IIA. Correctly routing the original investment is important when dividends, sale proceeds or capital are later repatriated.

Different banking arrangements may apply to foreign loans and other financing structures.

Step 5: Register for Tax

The company must confirm its applicable tax registrations with the Inland Revenue Department.

The main taxes may include:

The 15% income-tax rate does not apply merely because the company receives foreign currency. The income and banking conditions in the Inland Revenue Act must also be satisfied.

Can Foreigners Buy Property?

Foreign nationals and Sri Lankan companies with at least 50% foreign ownership are generally restricted from acquiring land outright, subject to statutory exemptions.

However, the law does not limit foreign buyers only to apartments above the fourth floor. A condominium parcel may qualify where the full purchase price is paid upfront through an inward foreign remittance before the deed of transfer is executed.

Businesses requiring land for a hotel, restaurant, office or factory may also consider a properly structured long-term lease. Legal advice should be obtained before entering into any property transaction.

Visa Requirements for Foreign Founders

Company incorporation and share ownership do not automatically give a foreign founder permission to live or work in Sri Lanka.

A short-term Business Visa permits activities such as meetings and negotiations, but it does not permit employment, self-employment or carrying on business or trade.

A founder who intends to manage or work for the company in Sri Lanka should obtain the appropriate investor, employment or residence visa.