An investment can enter Sri Lanka under ordinary legal procedures or through an approved arrangement with the Board of Investment of Sri Lanka (BOI).

Under ordinary entry, the project is governed by applicable Sri Lankan laws, including tax, customs and foreign-exchange regulations.

To obtain BOI concessions or facilitation, an investor must satisfy the relevant eligibility requirements and obtain the applicable BOI approval or agreement. Eligibility may depend on:

• Business sector and investment activity.
• Investment value and project scale.
• Export potential and economic contribution.
• Employment creation and technology transfer, where relevant.
• Conditions of the applicable incentive scheme.

BOI approval does not automatically guarantee every available tax or customs concession.

There is no single minimum investment threshold for all BOI concessions. Requirements vary according to the sector, project category, investment amount and incentive sought.

• Tourism and leisure: Requirements vary according to project type, scale and the applicable incentive framework.
• Retail trade: Foreign investment is subject to specific restrictions and minimum capital requirements under applicable rules.
• Strategic Development Projects: These are assessed under a separate legal framework with project-specific eligibility criteria.
• Other sectors: Investment thresholds and approval conditions depend on the activity and applicable BOI guidelines.

Investors should confirm current thresholds with the BOI before making financial commitments.

Visit the official BOI website for current investment guidelines.

Eligible projects may receive incentives or facilitation depending on the applicable legislation, investment category and approval terms.

• Customs-duty relief on qualifying capital goods and eligible imports.
• Tax concessions available to qualifying activities under applicable law.
• VAT or other levy exemptions and deferments where legally permitted.
• Coordination assistance for regulatory approvals and project implementation.
• Investor support services and visa-related facilitation where applicable.

BOI approval does not automatically provide a standard five-year tax holiday. Tax rates and incentives depend on the relevant law and the project’s specific eligibility.

The applicable corporate income tax rate should be verified for the relevant year of assessment.

Visit the Inland Revenue Department for official tax information.

Yes. Foreign nationals can be employed in Sri Lanka subject to the applicable immigration and residence visa requirements.

BOI-approved projects may receive assistance with the process of obtaining permission for eligible foreign personnel where their expertise is required.

The process may involve company documentation, details of the employee’s role and qualifications, and the appropriate visa application.

Final approval is subject to the requirements and decisions of the relevant Sri Lankan authorities.

Yes. Foreign investors can generally own 100% of a Sri Lankan company in many sectors, subject to applicable legal and regulatory restrictions.

Restrictions or special requirements may apply to specified retail activities and certain regulated industries.

Investors should verify the permitted ownership structure, minimum capital requirements, licences and foreign-exchange procedures before establishing or acquiring a company.

Foreign ownership of land in Sri Lanka is subject to significant legal restrictions.

Under the Land (Restrictions on Alienation) Act, foreign nationals, foreign companies and certain Sri Lankan companies with 50% or more foreign shareholding are generally restricted from acquiring freehold land, subject to applicable statutory exceptions.

Potential alternatives include:

• Leasing land under a legally valid agreement.
• Exploring long-term leases where legally permitted.
• Assessing whether a statutory exception applies to the transaction.

Lease duration, ownership arrangements and applicable taxes must be assessed individually. Investors should obtain Sri Lankan legal advice before proceeding.

Businesses operating in Sri Lanka must comply with applicable employment, labour, payroll and employee welfare legislation.

• Employment contracts and employee records.
• Working hours, overtime, leave and holidays.
• Minimum wage and applicable employment conditions.
• Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) obligations.
• Gratuity obligations where statutory conditions are met.
• Termination procedures and applicable compensation rules.
• Workplace safety and employee welfare requirements.
• Applicable payroll tax withholding and reporting obligations.

Requirements depend on the industry, employee category and applicable legislation. Employers should maintain accurate payroll records and seek professional advice where necessary.

Arbitration is an alternative dispute resolution method that allows parties to resolve eligible commercial disputes outside ordinary court proceedings.

Businesses may include arbitration clauses in contracts covering joint ventures, investments, construction, supply agreements and commercial partnerships.

A well-drafted clause should identify the disputes covered, applicable rules, legal seat, language and appointment of arbitrators.

Parties may choose international arbitration where permitted by the contract and applicable law. The enforceability of an arbitration agreement and award depends on the relevant legal framework.

Businesses should confirm the current status and rules of their chosen arbitration institution and obtain legal advice when drafting cross-border contracts.

Yes. Foreign investors may purchase shares in existing Sri Lankan companies, subject to applicable foreign ownership restrictions, company law, foreign-exchange requirements and sector-specific approvals.

Before completing an acquisition, investors should review:

• Foreign ownership eligibility for the company’s business activity.
• Regulatory approvals and licence requirements.
• Investment funding and foreign-exchange procedures.
• Financial statements, taxes, liabilities and legal obligations.
• Shareholder agreements and restrictions on share transfers.

Retail trade and certain regulated sectors may be subject to additional restrictions or minimum capital requirements. Requirements should be confirmed before completing the transaction.