Tech Destination Sri Lanka

Guides

How to set up a tech company in Sri Lanka

A foreign company can own 100% of a Sri Lankan software company, register it in about two weeks, and repatriate profits. Export service income is taxed at 15%. The main choices are whether to register with the Board of Investment, and whether to locate in Port City Colombo or a regular tech park such as Orion City.

Last reviewed 10 October 2026. Rules changed several times in 2025 and 2026. This is general information, not legal or tax advice. Confirm with the bodies linked below or a local adviser.

Registering the company

  • Law: Companies Act No. 7 of 2007. A private company needs at least one director and one shareholder.
  • Directors do not have to live in Sri Lanka. A company secretary is required and must be resident (De Saram).
  • Timeline: name reservation on the registrar's online portal takes 3 to 5 working days and the certificate 5 to 12 days (Chambers Doing Business In 2026).
  • Since 30 March 2026 you must file beneficial ownership details before incorporation is complete. From June 2026, new companies must register with Inland Revenue within 30 days.
  • A branch office of a foreign company needs a minimum inward remittance of USD 200,000.

Ownership and money

  • 100% foreign ownership and 100% repatriation of profits are allowed for IT companies, through an Inward Investment Account (Board of Investment guide, December 2025).
  • Withholding tax on dividends is 15%, subject to tax treaties.

Board of Investment registration

You can run a company without the Board of Investment (BOI). Registering gives you approval as a foreign investor, help with visas and a single point of contact. The BOI's December 2025 guide lists a minimum investment of USD 150,000 for IT and business process companies and USD 250,000 as the general minimum for foreign investment. Ask the BOI which applies to you. Larger projects of USD 3 million and above can negotiate further concessions (BOI: setting up in Sri Lanka).

Tax

  • Corporate income tax: 30% standard rate.
  • Exported services: 15%, where the service is used outside Sri Lanka and paid in foreign currency through a bank. This applies from 1 April 2025, when the previous exemption ended (Inland Revenue notice).
  • VAT: 18% standard rate. Exports of services are zero rated (Inland Revenue Department).
  • Payroll: employer EPF 12% and ETF 3%. See the salary and cost guide.

Port City Colombo

Port City is a special economic zone beside Colombo's business district. IGT1 Lanka was one of the first global IT firms to move in.

  • You operate there as an Authorised Person, licensed by the Colombo Port City Economic Commission. The licence runs 12 months and is renewable. Until space is ready you can work from an approved location outside the zone.
  • Business is done in foreign currency and must serve overseas clients unless the commission authorises local dealings.
  • Tax incentives are not automatic. They apply to companies designated as Businesses of Strategic Importance. Under regulations gazetted in September 2025, secondary businesses with that status pay 7.5% corporate tax for four years, then normal rates (KPMG, De Saram).
  • The income tax exemption for employees was removed in January 2026 for newly registered companies (KPMG).

Older guides that promise 25 year tax holidays and tax free salaries are out of date.

Where tech companies locate

  • Orion City, Colombo 09: a 16 acre IT park that is home to IFS, Virtusa, Synopsys and Michelin teams.
  • TRACE Expert City, Colombo 10: a tech campus whose tenants include CodeGen.
  • World Trade Center, Colombo 01: twin towers in the business district, home to the BOI and Dijital Team.
  • Port City Colombo: the special economic zone described above.

Visas

  • Staff of BOI companies get residence visas on the BOI's recommendation, for one year at a time. The BOI offers investors a five year residence visa.
  • An investor visa is available for USD 100,000 (5 years) or USD 200,000 (10 years) (Department of Immigration and Emigration).
  • A digital nomad visa is in force for remote workers earning at least USD 2,000 a month from abroad. It does not allow local employment.

Who to contact

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Common questions

Can a foreigner own 100% of a software company in Sri Lanka?

Yes. IT and software are not on the lists of sectors closed or capped for foreign investors, and the Board of Investment states that 100% foreign ownership and full repatriation of profits are allowed.

What is the corporate tax rate for IT companies in Sri Lanka?

The standard corporate rate is 30%. Since 1 April 2025, income from services exported and paid for in foreign currency through a bank is taxed at 15%. The earlier full exemption for service exports has ended.

How long does it take to register a company in Sri Lanka?

About 7 to 14 working days overall, according to the Chambers Doing Business In 2026 guide: 3 to 5 working days for name reservation and 5 to 12 days for the certificate.

Does Port City Colombo give a tax holiday to software companies?

Not automatically. A licence as an Authorised Person lets you operate there in foreign currency. Tax incentives depend on being designated a Business of Strategic Importance. Under the 2025 regulations, secondary businesses so designated pay 7.5% corporate tax for four years.