The following table provides an overview of other taxes that may be imposed on a company doing business in the country.
|Payroll Tax||Varies as per employee’s income||There is no payroll tax separately due by companies on their total payroll expenditure. Employers are required to withhold income tax and social security premiums on behalf of their employees under the PAYE system. Effective 1 April 2020, employers may deduct Advance Personal Income Tax (APIT) in place of PAYE from the employee’s salary. The APIT requires employee’s consent and is optional for employees whose gross remuneration exceeds LKR 250,000 per month or LKR 3 million for a year of assessment; and are resident but citizen of Sri Lanka. However, APIT is mandatory and does not require any consent for employees that are non-resident or resident but non-citizen of Sri Lanka.|
|Social Security Employer Contribution||12%||Employers’ contributions to the Provident Fund are equal to 12% of the monthly gross salary. The contributions can be made to the Employees Provident Fund established by the government or private provident funds approved by the labour authority. Employers also contribute 3% of monthly gross salary to the Employees Trust Fund established by the government.|
|Social Security Employee Contribution||8%||Employee’s contribution to the Provident Fund is 8% of monthly gross salary, which is deducted from the salary of the employee.|
|Stamp Duty||Varies||Stamp duty is levied on various instruments, including transfer related to the immovable property, etc. in Sri Lanka.|
|Excise Taxes||Varies||Excise duty is levied on certain specified imports and locally manufactured products, including motor vehicles, cigarettes, liquor, and others.|
|Customs Duty||Varies||Import duty in Sri Lanka ranges from 0% to 30%. Special Commodity Levy is imposed on certain commodities at the point of import.|
|Economic Service Charge (ESC)||0.50%||ESC has been abolished with effect from 1 January 2020. ESC was imposed on all businesses if the turnover exceeds LKR 12.5 million per quarter.|
|Nation Building Tax (NBT)||2%, 3.5%||NBT is abolished with effect from 1 December 2019. Previously, NBT at the rate of 2% was imposed on all businesses, with turnover exceeding LKR 3 million per quarter or LKR 12 million per annum. NBT at the rate of 3.5% was levied on foreign payments made using credit/debit cards for the purchase of goods or services, including digital services effective 1 June 2019.|
|Social Security Contribution Levy||2.5%||Effective from 1 October 2022, a social security contribution levy (‘SSCL’) applies at the rate of 2.5% on annual turnover exceeding LKR 120 million. The levy is payable by a person carrying on the business of manufacturing of any article or of providing a service of any description, or of wholesale or retail sale of any article including the importation and sale of such article, or a person who imports any article (see Note below).|
The taxable amount/base for the social security contribution levy is as follows:
- Import of any article (collected by Customs) - 100% of the import value;
- Manufacture of any article - 85% of the turnover;
- Provision of services:
- financial services - 100% of the value addition attributable to the financial services by applying the attributable method;
- real estate (land) and improvements - 100% of the turnover, which is equal to the sale value minus the market value of the bare land at the date of sale; and
- other services - 100% of the turnover;
- Wholesale and retail sale, including buy and sale, import and sale, and production and sale:
- sale of any article by a registered distributor in relation to any manufacturer or producer of any goods in Sri Lanka - 25% of the turnover; and
- wholesale or retail sale other than the above, including importation and sale - 50% of the turnover.
Every taxable person except a person importing any article is required to register within 15 days from the operation date of the SSCL Act i.e., by 15 October 2022, if their aggregate turnover in the previous 12 months exceeds LKR 120 million, or within 15 days from the date on which the aggregate turnover for a quarter exceeds or is likely to exceed LKR 30 million.