Business in Sri Lanka

Business in Sri Lanka

Sri Lanka is an island country with the population of 21.4 million. Sri Lanka is considered a lower middle-income country with GDP per capita of USD 4073. After the end of the civil war in 2009, its economy starts to grow steadily at an average rate of 5.8%.

The government of Sri Lanka makes the business registration process easier to attract more foreign direct investment (FDI). Now more foreign entrepreneurs want to start the business in Sri Lanka because of more facilities and opportunities.

In the last few years, Sri Lanka has achieved high GDP growth, and its per capita now stands at $4,310 which is substantially higher than many other countries. The government of Sri Lanka is continuously working to meet the objectives of becoming an upper middle-income country.

Types of Business Foreigners Can Start in Sri Lanka

Types of business in Sri Lanka

Sole Proprietorship

If you don’t have enough cash to start a large venture, then you can begin a Sole-Proprietorship business. This is a business that is owned by one person. The number of Sole-Proprietorship business in Sri Lanka is higher than other forms of business. In, Sole-Proprietorship Business the owner takes all the action and keeps all the profits. However, all the profits in this business is taxed as personal income. Some advantages of sole proprietorship business are shown below–

  • Ease of creation- this business can be established instantly, easily and inexpensively.
  • Easy income tax filling- there is no need to open a business income tax file. Personal income tax file can be use to pay the sole proprietorship business.
  • No need of state paperwork- there is no need of state filling to create a sole proprietorship.

Partnership Company

This is a type of business where the owner is shared. From the perspective of legal and tax, all the partners of the company share the obligation. The partnership is not taxed as separate legal entities. Therefore, the partners are subjected to personal income tax. In Sri Lanka, the partnership company can have a minimum of 2 members and maximum 200. The advantages of partnership business are given below–

  • More money is available for the business.
  • Very easy to establish and the startup cost of this business is low.
  • There is limited external regulation.

Limited Liability Company (LLC)

This is a type of company where the members of the company are not liable for the debts of the company. Limited Liability Company is known as hybrid entities, which combine the characteristics of both corporation and sole proprietorship business. LLC is eligible to go through the tax characteristics of a sole proprietorship of partnership while restricting the liability of the owners, that is similar to a corporation. There are many advantages of LLC such as —

  • All the members of the LLC have the protection against the liability.
  • There is no legal requirement to conduct any formal meetings or maintaining the time of the meetings.
  • The taxation process is similar to sole proprietorship business. Only the members need to show the earnings in their individual tax returns.

Public Limited Company (PLC)

This is a type of company which has offered shares to the public. Both the PLC and LLC require a minimum share capital to incorporate their business. To register a public limited company in Sri Lanka the company must have at least 2 shareholders and two directors. The directors are required for filling the annual returns along with other tasks. Anyone can acquire the share of a public limited company. Of the advantage of forming a Public Limited Company is– the capital can be raised by issuing a public share.

Offshore Company

An offshore company is a type of company that can operate outside of the country of its registration. You can register an offshore company in Sri Lanka and can conduct business outside of the country.  However, you are not allowed to conduct business within the country in any circumstances.

Advantage & Disadvantage of Doing Business in Sri Lanka

There are some major advantage and some disadvantage of doing business in Sri Lanka. The table below shows the details.

Advantage Disadvantage
The documented procedure of company registration is much easier. The political condition is not completely stable in Sri Lanka, which may affect foreign business.
Sri Lanka have high performance stock market, which is advantage for some business. Bribery and Corruption
Most of the people of Sri Lanka are highly educated; therefore, business can be incorporated with skilled people. "

Some Other Small Business Idea in Sri Lanka

Many foreigners want to start a small business in Sri Lanka, but sometimes they confuse themselves, with the types of business they should start. To help them out this article is going to describe some of the small business ideas in Sri Lanka.

Some Other Small Business Idea in Sri Lanka

Real Estate Business:

There are lots of opportunities in the real estate industry. You can start this business as a real estate agent or as an investor. There are lots of ways to make money in this sector, and it is also possible to make a huge amount of profit out of this business. You could also become a landlord and rent your property and do some productive business. However, if you are not comfortable with owning property, you could also invest in property management. Though the real estate industry is very competitive, still there are lots of opportunities in this business

Sell Used Products:

It is another small business that you can start in Sri Lanka. You may sell used goods such as mobile, electric products, motorcycle etc. You call sell this product in online or at your shop. You can start your marketing through online or through local daily newspaper advertisement.

Pet Food & Accessories:

Most of the Sri Lankan love pets. Dogs are the common pets in Sri Lanka. At least each house in the neighborhood has one pet. Therefore, there are good opportunities in pet food and accessories business. You can start this business with low investment and make a decent amount of profit. However, for marketing of your business, you can advertise in the local newspaper or distribute leaflet among the neighbor.

Education Academy:

There are many young people in Sri Lanka, who wants to learn something interesting that will help them to earn some extra money. Suppose if you are an expert in graphic design, then you can open a graphic design institute where you will teach people- how to design things. Once you get popular more student will come to for learning. You can earn a significant amount of money through this business.


Incorporating business in Sri Lanka is a great opportunity for foreigners. The governments of Sri Lanka make the company registration procedure much easier. Now foreigner can set up various types of company in Sri Lanka without any hassle. Though the registration procedure is easier, but as a foreigner you may not know all of it. Do not worry! S&F Consulting Firm is always there for you. They had an expert and experienced professional who will help you out with all the process of company registration. Well, now you can know about obtaining a visa to Bangladesh as a Sri Lankan citizen.


Company Registration Expert Since 2012