Any company or entrepreneur wanting to start a business in Sri Lanka would have to overcome bureaucratic and legal hurdles. The procedures associated with establishing a company in Sri Lanka are as follows:
Apply for Approval of Name:
Once a name has been chosen for the business entity, it would have to be registered with the concerned government authority. It would take 3 days for the name to be approved.
Register at the Companies Registry
A company may draft or adopt the standard set of articles of association in Table A of the Companies Act of Sri Lanka, No.3 of 2007.
According to the Companies Act No.3 of 2007 the articles of association must be submitted in duplicate to the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar General of Companies is required for the articles of association. According to the new Companies Act, notary publics are no longer required to witness the signing of the articles of association.
A flat fee of LKR (Sri Lankan Rupee) 8500 as the registration fee for Form 1, and LKR 350 + 12% VAT is charged of the other two forms 18 and 19 and the articles of association. The certificate of incorporation will be received in about 3 days.
Register with Tax Authorities to Obtain a TIN
The applicant or an authorized representative of the applicant must be physically present at the Inland Revenue Department to pick up and complete the application for a TIN number. The taxpayer identification number (TIN) and the VAT registration number (temporary) can be obtained in a day. To obtain permanent VAT registration, the applicant must submit documents proving turnover of LKR 500,000 over 3 months. This is done along with income tax registration. The procedure takes 1–3 days.
Register with Department of Labor to Obtain EPF and ETF Registration
Companies must register with two funds, the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF). Both funds are government-owned and maintained by the Central Bank. To register with these funds, the employer must visit the Ministry of Labor and complete relevant forms. Companies must also pay gratuities to employees that have been employed for more than 5 years. The gratuity provisions do not apply to companies that have fewer than 15 employees. There is no pension scheme for private sector employees. Businesses that engage in activities of a dangerous nature should obtain special Factories Ordinance checkups.
The issuance of ETF and EPF numbers may sometimes take 4–6 months. However, a number is assigned to the company upon application. Accordingly, the company has fulfilled its obligation and may remit a sum of money to the department for ETF and EPF registration under the assigned number.
Last Updated on: 19-05-2010