Corporate tax in Sri Lanka


Corporate Income Tax Rate (%) 28 (a)
Capital Gains Tax Rate (%) — (b)
Branch Tax Rate (%) 28 (a)
Withholding Tax (%)
Dividends 10 (c)
Interest 10 / 15 (d)
Royalties from Patents, Know-how, etc. 15
Management Fees 5
Sale Price of Gems at Gem Auctions 2.5
Reward Payments, Lottery Winnings and Gambling Winnings 10 (e)
Branch Remittance Tax 10
Net Operating Losses (Years)
Carryback 0
Carryforward Unlimited (f)

a) This is the standard rate. For other rates, see Section B.

b) Capital gains tax will be reimposed in Sri Lanka. However, at the time of writing, the date of imposition and the rates had not yet been announced.

c) This tax, which is a final tax, is imposed on dividends paid to residents and nonresidents. A deemed dividend tax is imposed on companies if the divi­dend distributed is less than 10% of the company’s distributable profits. For details, see Section B.

d) The 10% rate applies to interest paid on deposits. Companies may offset the 10% withholding tax against their annual income tax liability. The 15% rate applies to gross interest on loans granted by companies, partnerships or other bodies of persons outside Sri Lanka other than foreign banks or financial institutions.

e) This withholding tax applies to amounts exceeding LKR500,000.

f) See Section C.

Taxes on corporate income and gains

Corporate income tax. Companies resident in Sri Lanka are sub­ject to income tax on their worldwide income. Nonresident com­panies are subject to tax on their profits and income derived from Sri Lankan sources. A company is considered to be a resident company if its registered or principal office is in Sri Lanka or if the control and management of its business are exercised in Sri Lanka.

Rates of corporate income tax. The standard rate of corporate income tax is 28%.

A 17.5% rate of corporate income tax applies to profits and in­come derived from the following:

  • Tourism
  • Construction
  • Agriculture
  • Exports

The 17.5% rate also applies to profits and income derived by small and medium-sized enterprises.

A 40% rate of corporate income tax applies to profits and income derived from the business of tobacco and liquor.

If the income tax rate following the expiration of a tax holiday, as specified in a Board of Investment (BOI) agreement, is higher than the income tax rate under the Inland Revenue Act, the lower rate prevails.

Tax incentives. All of the income tax incentives offered have been streamlined and are now included in the Inland Revenue Act.

The BOI incentives are limited to those relating to customs duties, exchange-control restrictions and certain other items.

Significant tax incentives currently offered include the incentives described below.

The following types of profits and income are exempt from in­come tax:

  • Profits earned in foreign currency by manufacturers of textiles, leather products and certain other products from supplies made to foreign purchasers that establish headquarters in Sri Lanka for management, finance, supply chain and billing
  • Profits and income (other than interest and dividends) of government-assisted private schools under specified conditions
  • Profits and income of businesses in which goods are purchased from one country and transferred to another country other than Sri Lanka
  • Profits and income of undertakings for the cultivation of renew­able energy crops on agricultural land (exempt for 10 years)
  • Profits and income from manufacturing, distribution and mar­keting of organic fertilizers and pesticides
  • Income earned by resident companies or partnerships for ser­vices provided in or outside Sri Lanka to persons or partnerships outside Sri Lanka (other than commissions or similar receipts), if the income is remitted to Sri Lanka through a bank
  • Income derived from the export of gold, gems (imported gems in raw form, cut and polished in Sri Lanka) and jewelry
  • Profits and income from the sale of Sri Lanka Development Bonds
  • Profits from the sale of foreign-currency sovereign bonds to nonresident persons or licensed commercial banks in Sri Lanka
  • Profits and income from investment in Economic Resurgence Certificates with monies in accounts approved by the Central Bank of Sri Lanka
  • Income in foreign currency earned by resident companies from services rendered outside Sri Lanka for carrying out construc­tion projects
  • Income of nonresident companies outside Sri Lanka from the supply of plant, machinery or equipment to the government of Sri Lanka or from projects considered essential to the eco­nomic development of Sri Lanka
  • Profits and income from the redemption of units of unit trusts or mutual funds
  • Profits and income of unit trusts from investments made after 1 January 2015 in securities denominated in US dollars and listed on a foreign stock exchange
  • Dividends, interest and fees received from investments from outside Sri Lanka, if the income is remitted to Sri Lanka
  • Royalties received from outside Sri Lanka if remitted to Sri Lanka through a bank
  • Royalties or payments made by BOI companies for designing to nonresident companies during a tax-holiday period if the payer company has invested more than USD50 million from funds sourced overseas and if the services are not obtainable in Sri Lanka
  • Royalties with respect to internationally recognized intellectual property received in foreign currency (exempt for a specified period)
  • Income from listed debentures received by unit trusts

Tax holidays for periods ranging from 5 to 10 years granted for the following:

  • New companies investing USD5 million to USD10 million in a new undertaking engaged in specified activities relating to the development of the national economy
  • Beginning from 1 April 2011, investments in fishing, cultiva­tion and primary processing of agricultural seeds or planting materials
  • Headquarters and regional head offices of international institu­tions if relocated to Sri Lanka (tax holiday for a specified period)

A 10% reduction in income tax is granted to ship operators or agents of foreign ships with respect to skills development of trainees.

Royalties received by a company outside Sri Lanka with respect to a specific requirement of an information technology or busi­ness process outsourcing company in Sri Lanka are exempt for two years.

BOI companies are exempt from customs duty on disposals of machinery used for more than 10 years.

Income of unit trusts and mutual funds is taxed at a rate of 10%.

Incentives for hub services. Under commercial hub regulations, specified business activities are exempted from the provisions of the Customs Ordinance, Imports and Exports Act, Exchange Con trol Act and certain other legislation. The following are sig­nificant aspects of the regulations:

  • The regulations designate free ports and bonded areas for the carrying out of specified activities and provide minimum in­vestment limits and other criteria.
  • Business activities for new enterprises are entrepôt trade, off­shore business, providing front-end services, headquarters operations and logistic services.
  • The minimum investment ranges from USD1 million to USD5 million, with at least 65% of the investment from for­eign sources.
  • Annual re-export turnover ranging from USD10 million to USD20 million must be achieved over a five-year period.
  • Foreign ownership of 100% is permitted for businesses that are limited to 40% foreign ownership under exchange-control regulations.

Capital gains. Capital gains tax will be reimposed in Sri Lanka. However, at the time of writing, the date of imposition and the rates had not yet been announced.

Administration. The normal fiscal year (year of assessment) runs from 1 April to 31 March. A company may select a different fis­cal year if it obtains prior permission from the Department of Inland Revenue. Income tax is payable in four quarterly install­ments, which are due one and a half months after the end of each quarter. The final tax return must be submitted by 30 November after the fiscal year. Any balance of income tax due must be paid by 30 September following the end of the fiscal year.

If a company files the final tax return by 30 November, the statute of limitations for the issuance of an assessment expires 18 months from the statutory date of filing the return, effective from the year of assessment beginning 1 April 2013. For returns filed after 30 November, the statute of limitations expires four years after the statutory date of filing the return.

Separate sets of accounts must be maintained for different activi­ties of a trade or business that are exempt or subject to tax at dif­ferent tax rates.

An advance ruling system is available for investors eligible for tax exemptions to ensure consistency in the application of provisions of the tax laws. Interpretations of the Inland Revenue Act must be provided to taxpayers within six months of the date of the request for a ruling.

A refinance facility repayable within five years at an interest rate of 6% is provided to enable settlement of arrears after 2010 of tax, Employees Provident Fund contributions and Employees Trust Fund contributions.

A refund claim for a year of assessment must be claimed in writ­ing within three years after the end of the year of assessment. If the assessor agrees with the refund, the refund can be offset against future liability or refunded to the taxpayer.

Dividends. A dividend tax of 10% (also known as the Dividend Tax at Source) is withheld from dividends distributed out of prof­its included in taxable income. The 10% tax is the final tax on dividends paid to residents and nonresidents. Dividends paid by a resident company to a resident or nonresident company are not included in the assessable income of the recipient if any of the following apply:

  • A withholding has been made for dividend tax.
  • The dividend is exempt from income tax.
  • The dividend consists of any part of the amount of dividends received by the payer from another resident company.

Dividends received from nonresident companies are exempt from income tax.

Dividends distributed out of dividends received from nonresident companies outside Sri Lanka are exempt from income tax if the distribution is made within one month after the receipt of the dividends from the nonresident companies.

Dividends distributed by BOI companies (companies that have entered into agreements with the BOI under which tax holidays have been granted) are subject to the dividend tax if the agree­ment between the BOI and the company was entered into after 6 November 2002.

A company that distributes dividends that total less than 10% of its distributable profits for the preceding fiscal year is subject to a deemed dividend tax at a rate of 15% on the difference between 331/3% of the distributable profits and the total dividends distrib­uted. The calculation of distributable profits is specified in the law.

Dividends declared by a new undertaking engaged in the manu­facturing and exporting of a product with an investment of more than USD2 million in the acquisition of fixed assets are exempt from dividend tax for five years from the commencement of com­mercial operations. Such undertakings are also exempt from deem­ed dividend tax for the same period.

The definition of dividends includes scrip dividends.


The following are significant aspects of the taxation of interest:

  • Withholding tax at a rate of 10% is imposed on interest paid to companies on bank deposits. Companies may offset this with­holding tax against their annual income tax liability.
  • Withholding tax at a rate of 10% is imposed on interest payable to residents and nonresidents on corporate debt securities at the time of issuance of the security. For such instruments with a floating rate of interest, withholding tax is deductible at the beginning of each reviewing period. If no upfront deduction of withholding tax is made, the tax must be withheld at the time of payment of interest.
  • Tax at a rate of 10% is withheld at the point of issuance of gov­ernment securities, bonds and similar instruments by the Central Bank of Sri Lanka.
  • Interest income on secondary market transactions and income on corporate debt securities that are included in business income are grossed up by 1/9, and a notional credit of 10% is granted against tax liability.
  • Interest income received by a bank in Sri Lanka on loans is exempt from income tax if the loans are granted to a company for investment in or the meeting of expenditure incurred by a newly formed company outside the Colombo and Gampaha districts or by a company relocating outside the Colombo and Gampaha districts.
  • Interest on investments made outside Sri Lanka is exempt from income tax.
  • Interest accruing on funds invested in Sri Lanka Development Bonds and Reconstruction Bonds that are denominated in US dollars and issued by the Central Bank of Sri Lanka is exempt from income tax.
  • Interest income on foreign-currency sovereign bonds paid to nonresident persons or licensed commercial banks in Sri Lanka is exempt from income tax.
  • Interest accruing to persons or partnerships outside Sri Lanka on loans granted to persons or partnerships in Sri Lanka is exempt from income tax.
  • Interest earned by banks or financial institutions on loans grant­ed from Investment Fund Accounts (banks and financial institu­tions that are liable to value-added tax [VAT] on financial ser­vices must transfer specified amounts to Investment Fund Accounts) is exempt from income tax.
  • Interest earned on listed corporate debt instruments is exempt from income tax.
  • Interest on bonds issued by the Municipal Council is exempt from income tax.
  • Interest income accruing to banks from the providing of loan facilities for the construction of residential apartments for pro­fessionals is taxed at 50% of the applicable tax rate.
  • Interest accruing to persons from investments made after 1 Jan­uary 2015 in corporate debt securities issued by the Urban Development Authority is exempt from income tax.

Foreign tax relief. Foreign tax relief is available under various double tax treaties. In general, Sri Lankan tax payable (other than dividend tax) is allowed as a credit against any foreign tax com­puted by reference to the same income. Similar relief is available for foreign tax paid in the other treaty country.

Determination of trading income

General. The assessment is based on financial statements prepared in accordance with generally accepted accounting principles.

Nonresident companies may pay income tax on a deemed profit negotiated with the Inland Revenue Department. However, they must be taxed on at least 6% of their turnover.

All expenses incurred in the production of income are allowable unless specifically prohibited. In addition, certain expenses that are specifically authorized are permitted as deductions. Nondeduc­tible expenses include capital expenditures, personal and domes­tic expenses, and losses from appropriation of profits.

The following restrictions apply to the deductibility of expenses:

  • 25% of advertising expenses is disallowed (other than advertis­ing outside Sri Lanka with respect to the export trade or the provision of services for payment in foreign currency). Specific sponsorship of international sports events approved by the Min­ister of Sports is fully allowed, effective from 1 August 2012.
  • Entertainment expenses are disallowed.
  • The deductibility of head office expenses is restricted to the lower of the actual expenditure or 10% of the profits or income of the nonresident company.
  • Foreign travel expenses relating to business and foreign training expenses can be claimed up to a maximum of 2% of the preced­ing year’s statutory income.
  • Debt-to-equity rules restrict the deduction of interest paid (see Section E).
  • Hire or rental expenses included in traveling expenses are disal­lowed.
  • The deduction for management fees is limited to LKR2 million or 1% of turnover, whichever is less.
  • Listing expenses of a company are allowed up to a maximum of 1% of the value of the initial public offer.
  • Tax borne on behalf of employees is disallowed.

Expenses with respect to vehicles provided to employees are de­ductible regardless of whether such vehicle benefits are taxable in the hands of the employees.

Local or foreign travel expenses incurred by companies exclusive­ly providing services of design development, product development or product innovation are allowable expenses.

Maintenance or management expenses incurred by a company with respect to sports grounds, stadiums or sports complexes are allowable expenses.

Pre-commencement expenses incurred by new small-and-medium scale enterprises with expected turnover of less than LKR500 mil­lion are allowed as a deduction from statutory income in the year of commercial production.

Nation Building Levy (see Section D) paid is an allowable expense.

An enterprise that incurs expenditure on R&D carried out through a government or private institution is eligible for a triple deduc­tion or a double deduction, respectively.

Special levies payable to the government by public corpora­tions or government-owned business undertakings are allowable expenses.

The acquisition cost of internationally recognized intellectual property earning foreign currency through royalties is fully allow­ed as deduction in the year of acquisition.

A triple deduction is granted to persons registered with the Ter tiary Vocational Education Commission with respect to expenses in­curred on standard skill development training provided to trainees.

A triple deduction is granted for expenditure incurred on research, innovation and brand promotion by exporters.

Qualifying payments. Companies may claim a deduction for qual­ifying payments, which include donations to the government and approved investments. The deduction for qualifying payments is limited to one-fifth of assessable income.

Donations to the government in cash are deductible in full. Un­limited qualified payment deductions are also available for invest­ments in relocated companies outside the Colombo and Gampaha districts and for investments in housing projects for shanty dwellers.

Qualifying payment deductions for donations to approved chari­ties established for the provision of institutional care for the sick and needy are limited to LKR500,000 or one-fifth of the assess­able income, whichever is less. Qualifying payment deductions for in vestments in the production of a film are restricted to LKR35 mil­lion. Qual ifying payment deductions for investments in companies located outside the Colombo and Gampaha districts are restricted to LKR100 million.

The investment of a minimum of LKR50 million made before 31 March 2014 by an existing enterprise in itself for expansion can be claimed as a qualifying payment, subject to 25% of the investment being maintained for four years of assessment.

Expenses incurred under community development projects in the most difficult villages identified and published in the Govern­ment Gazette can be claimed as a qualifying payment, up to a maximum of LKR10 million.

The main company in an acquisition or merger of financial com­panies may deduct the costs of the transaction.

Inventories. Inventories are normally valued at the lower of his­torical cost or net realizable value. For agricultural produce, in – ventories are valued at subsequent sale prices. Cost is usually determined on a first-in, first-out (FIFO) formula or a weighted average cost formula.

Provisions. In general, no deductions are allowed for reserves or provisions. However, provisions may be deducted if the expenses provided for are paid within three years after the year of assessment.

For banks, the deductibility of a specific provision for bad debts is limited to 1% of aggregate outstanding loans of the bank at the end of the fiscal year.

Depreciation. Depreciation allowances are granted to the owner of the asset from the fiscal year in which the asset is first used. The allowance is computed using the straight-line method at the following rates, which are effective from 1 April 2011.

Asset Rate (%)
Buildings 6.67 (a)
Buildings constructed after 1 April 2011 for commercial use 10
Bridges, reservoirs, electricity and water
distribution lines, toll roads
Plant and machinery or equipment 33.33
Plant and machinery for certain businesses,
such as health care, paper printing, gem
cutting, polishing and packaging
commodities for commercial purposes
and rice milling
Construction machinery 25
Ships (only for the owner) 33.33
Commercial motor vehicles 20
Furniture 20
Computer hardware and software
General rate 25
Computer software developed in Sri Lanka 100
Calculating equipment 25
Intangible assets (excluding goodwill) 10 (b)
High technology energy efficiency machinery
and equipment
New technology or upgrades of technology
machinery and equipment for apparel and
other manufacturing industries
50 (c)
Plant, machinery and equipment providing more
than 30% of power generation out of alternative
energy resources
100 (c)
Plant, machinery and equipment for establishment
of broker back office system
100 (c)
Plant, machinery and equipment for export
industry (exports exceeding 60% of turnover)
50 (c)
Plant, machinery and equipment for new export
100 (d)

a) This rate applies to constructed buildings and purchased industrial buildings and hotels, including condominium property acquired or constructed to be used as a commercial unit, hotel building or industrial building.

b) For assets other than software, acquisition and assembling expenditure quali­fies for the allowance.

c) This rate applies to assets acquired on or after 1 April 2013.

d) This rate applies if investments in fixed assets that qualify for depreciation allowances exceed USD2 million.

Depreciation allowances are generally subject to recapture on the sale of an asset to the extent the sales proceeds exceed the tax value after depreciation. Any amounts recaptured are subject to tax at the regular corporate tax rate. Losses on the sale of a depre­ciable asset may be claimed as trade losses.

If a capital asset is disposed of and replaced within one year, the allowance is granted on the acquisition cost, less the profit on sale of the old asset.

Relief for losses. A loss incurred is deductible if, had there been a profit instead of the loss, such profit would have been assessable. Losses may be carried forward for an unlimited number of years. However, a loss carryforward may offset only 35% of the total statutory income. The balance of the losses may be carried for­ward to offset income in future years. Losses incurred by foreign-currency banking units and losses from horse racing may offset profit from the same source only.

Losses from a leasing business may be offset only against profits from the same business.

Insurance companies may set off general losses and life losses only against the same source of profits.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate
Value-added tax (VAT); imposed on all goods
and services supplied in, or imported into,
Sri Lanka and on retail and wholesale trade,
excluding essentials, other than certain exempt
items including the supply and import of motor
vehicles, cigarettes and liquor (effective from
25 October 2014, these items are liable to the
Excise [Special Provisions] Duty, which
replaces VAT at the point of import); liability
threshold for VAT is LKR12 million per year
or LKR3 million per quarter
Standard rate 15.00%
Specified goods and services, including
exports and international transportation
VAT on financial services (VATFS); imposed
on the supply of financial services by
specified institutions carrying on the business
of financial services, including the provision
of financial leasing facilities; unit trusts and
mutual funds are exempt
Economic Service Charge (ESC); imposed
on turnover if the turnover exceeds
LKR50 million per quarter; airlines and
shipping lines, dealers in lottery, unit trusts,
mutual funds, distributors (as defined in ESC Act)
and proceeds from the sale of foreign-currency
sovereign bonds are exempt from ESC
Standard rate 0.50%
Nation Building Levy; applies if turnover
exceeds LKR12 million per year; threshold
of LKR25 million per quarter for certain
industries; levy is imposed on the entire
amount of turnover if the amount of turnover
exceeds the threshold
Nation Building Levy on financial services;
same tax base as VATFS (see above)
Betting and gaming levy; annual amounts
of the levy
LKR25,000 to
LKR400 million
Tax imposed on gross monthly collections
from bookmaking and gaming; imposed
instead of all indirect taxes other than the
betting and gaming levy mentioned above
Telecommunication levy
Standard rate 25.00%
Services provided through internet and
Levy for Crop Insurance Scheme; on banking,
finance and insurance institutions; imposed
on annual profits
Excise duty; on specified imports and
locally manufactured products
5% to 115%
Import duty 0% to 30%
Cess on specified imported items Various
Stamp duty
On transfers of immovable property 3% / 4 %
On specified instruments Various
On receipts exceeding LKR25,000 (imposed
on all transactions other than transfers of
immovable property and transactions
involving specified instruments)
On local credit card usage 0.00%
On foreign purchases 2.50%
Port and airport development levy; imposed
on declared Cost, Insurance, Freight (CIF)
value of all cargo
(Exports, the film industry, imports of goods
for specified projects with foreign funds
donations received by the government, imports
of artificial limbs, crutches and similar items
and yarns and fabrics are exempt.)
Casino Industry Levy LKR1 billion
Bars and Taverns Levy LKR250,000
Direct-to-Home Satellite Services Levy LKR1 billion
Satellite Location Levy LKR1 billion
Dedicated Sports Channel Levy LKR1 billion
Special Commodity Levy Various
Social security contributions, on employees’ gross earnings
Employees’ Provident Fund (EPF) paid by:
Employer 14.00%
Employee 8.00%
Employers’ Trust Fund, paid by employer 3.00%

Miscellaneous matters

Foreign-exchange controls. Foreign-exchange regulations are gov­erned by the Exchange Control Act and other directives issued by the Central Bank of Sri Lanka. The regulations include the following:

  • Dividends may be remitted to nonresident shareholders on the production of an Auditors’ Certificate.
  • Authorized dealers are permitted to maintain nonresident ac – counts, which may be held by non-nationals resident outside Sri Lanka, companies registered outside Sri Lanka, foreign banks and so forth.
  • Facilities are provided for resident non-nationals to maintain ac counts in designated foreign currencies with commercial banks in Sri Lanka.
  • Foreign investors may acquire shares representing up to 49% of a company’s issued capital and repatriate profits and sales pro­ceeds (the Ministry of Finance may approve a larger percent age of up to 100%, depending on the type of investment). Subject to the approval of the Central Bank, foreign ownership of 100% is allowed in retail and wholesale trading with a minimum invest­ment of USD150,000 or in non-deposit financial services, such as merchant banking and venture capital companies.
  • Companies approved by the Board of Investment of Sri Lanka may freely remit capital and profits.
  • No restrictions are imposed on current-account transactions.
  • Exporters with adequate protection against foreign-currency fluctuations may engage in foreign borrowing free of exchange-control restrictions.
  • Corporate entities may borrow up to USD10 million per year for the next three years without Department of Exchange Control approval.
  • Licensed commercial banks may borrow up to USD50 million per year without Department of Exchange Control approval.
  • Persons providing services to tourism and foreign businesses may accept foreign currency if such earnings are deposited in a bank within seven working days.
  • Foreign beneficiaries may invest in rupee-denominated deben­tures.
  • Foreign companies may open places of business in Sri Lanka.
  • Foreigners touring Sri Lanka or engaged in business in Sri Lanka may open foreign-currency accounts in Sri Lanka.
  • Staff of foreign embassies may open foreign-currency accounts in Sri Lanka.
  • Holders of Foreign Exchange Earners Accounts may obtain foreign-currency loans.
  • It is generally permissible to repatriate capital gains from sales of residential properties by nonresidents (subject to certain conditions).
  • The amount of foreign-currency notes that may be issued for travel purposes is USD5,000.
  • No exchange-control approvals are required for the opening of bank accounts by dual citizens.
  • An upfront tax of 15% is imposed on foreigners who lease state or private lands, subject to specified exemptions.
  • Foreign investors are permitted to bring money into Sri Lanka through any bank account existing in the formal banking sys­tem.
  • A tax clearance certificate from the Inland Revenue Department is required for the remittance of specified payments such as royalties, and payments for communication services, computer software and information services.

Transfer pricing. Under the Inland Revenue Act, if significant pric­ing discrepancies are considered “artificial,” the tax authorities may determine a commercially acceptable price for tax purposes. Profits and losses from transactions between associated undertak­ings are determined taking into account the arm’s-length principle.

Currently, transfer-pricing regulations apply equally to local and foreign transactions.

Advance pricing agreements may be entered into with the Depart­ment of Inland Revenue with regard to “international transactions.” The arm’s-length price is determined using methods prescribed for this purpose.

Debt-to-equity rules. For group companies, a debt-to-equity ratio of 3:1 applies to manufacturing companies, and a 4:1 ratio applies to other types of companies. Interest paid on loans in excess of the debt-to-equity ratio is not deductible for tax purposes.

Purchase of land by foreigners. The purchase of land by foreign companies and companies incorporated in Sri Lanka with direct or indirect foreign shareholding exceeding 50% is prohibited, un­less specifically allowed.

Treaty withholding tax rates

The following table lists the maximum withholding tax rates under Sri Lanka’s double tax treaties.







Australia 15 10 10
Bahrain 5/7.5/10 10 10
Bangladesh 15 15 15
Belarus 7.5/10 10 10
Belgium 15 10 10
Canada 15 15 10
China 10 10 10
Denmark 15 10 10
Egypt 15 15 15
France 10 10 10/15
Germany 15 10 10
India 7.5/15 10 10
Indonesia 15 15 15
Iran 10 10 8
Italy 15 10 10/15 (a)
Japan 10 15 0/7.5 (a)
Korea (South) 10/15 (b) 10 10
Kuwait 5/10 10 20
Luxembourg 7.5/10 10 10
Malaysia 15 10 10
Mauritius 10/15 (d) 10 10
Nepal 15 10/15 (e) 15
Netherlands 10/15 (b) 10 10
Norway 15 10 10
Pakistan 15 10 20
Palestinian Authority 10 10 10
Philippines 15/25 15 15/25
Poland 10 10 10
Qatar 10 10 10
Romania 12.5 10 10
Russian Federation 10/15 10 10
Seychelles 7.5/10 10 10
Singapore 15 10 15
Sweden 15 10 10
Switzerland 10/15 (b) 10 10


Thailand 15 10/25 (c) 15
United Arab Emirates 10 10 10
United Kingdom 15 10 10
United States 15 10 5/10 (g)
Vietnam 10 10 15
Non-treaty countries 10 10/15 (h) 10 (f)


a) The lower rate applies to royalties for copyrights and cinematographic films. The higher rate applies to other royalties.

b) The 10% rate applies if the recipient holds at least 25% of the payer. The 15% rate applies to other dividends.

c) The 10% rate applies to interest received by a financial institution. The 25% rate applies to other interest.

d) The 10% rate applies if the beneficial owner of the dividends is a company that holds at least 10% of the capital of the payer. The 15% rate applies to other dividends.

e) The 10% rate applies to interest paid to banks. The 15% rate applies to other interest.

f) The tax applies to payments exceeding LKR50,000 per month or LKR500,000 per year.

g) Rent paid for the use of tangible movable property is taxed at the rate of 5%.

h) See footnote (d) in Section A.

Sri Lanka has also entered into agreements covering interna tional air transport with the Hong Kong SAR, Oman, Saudi Arabia and the United Arab Emirates.