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  • Statutory Tax Rate 24
  • Surtax Based on Taxable Income 0
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 24

Statutory Tax Rate

Effective 1 January 2020, Sri Lanka's standard corporate tax rate is 24% (28% previously), while a 40% rate applies to companies with income from betting, gaming, liquor or tobacco. Manufacturing companies are subject to tax at the rate of 18%.

A reduced rate of 14% applies to:

  • Small and Medium Enterprises (annual revenue less than LKR 500 million);
  • Exporters of goods and services;
  • Companies providing education services;
  • Companies engaged in promoting tourism;
  • Construction companies (effective 1 April 2019);
  • Agro-processing companies;
  • Health care services;
  • Information Technology and enabled services until 31 December 2019; and
  • Gains and profits from the sale of goods or merchandise where the payment is received in foreign currency and remitted through a bank to Sri Lanka (effective 1 January 2020).

The 14% rate also applies for companies listed between 1 January 2021 and 31 December 2021 on the Colombo Stock Exchange licensed by the Securities and Exchange Commission of Sri Lanka (other than gains from the realization of investment assets) for three years commencing from 1 April 2022. Further, the aggregate tax payable (other than on gains from the realization of investment assets) by such companies may be reduced by 50% commencing from 1 April 2021.

Income from information technology and enabled services is exempt from tax. Effective 1 April 2019, profits and gains derived from the sale of produce of an undertaking for agro-farming, without subjecting it to any process of production or manufacture, are exempt for a period of 5 years.