Free invoice generator and tax tools for Sri Lanka

A small business in Sri Lanka deals mainly with the Inland Revenue Department (IRD). Income tax falls under the Inland Revenue Act, No. 24 of 2017: from 1 April 2025 individuals pay 6% on the first Rs. 1,000,000 and then 18%, 24%, 30% and 36% on higher slices, after a personal relief of Rs. 1,800,000 a year from the 2025/2026 year of assessment, and companies pay a normal rate of 30%. VAT is charged under the Value Added Tax Act, No. 14 of 2002.

The Social Security Contribution Levy (SSCL), under Act No. 25 of 2022, is a separate 2.5% charge on turnover that is not a profit tax. It applies to businesses above Rs. 15 million of turnover in a quarter or Rs. 60 million over four quarters, and only part of turnover is charged: 100% for services, 50% for wholesale and retail sale, 85% for manufacturing. It is self-assessed and paid monthly by the 20th. Employers also owe Employees' Provident Fund and Employees' Trust Fund contributions, which are paid to the Central Bank's EPF Department and to the ETF Board rather than to IRD.

The latest change is the Value Added Tax (Amendment) Act, No. 14 of 2026, certified on 30 June 2026. From 1 July 2026 it adds exemptions for businesses approved as Businesses of Strategic Importance in the Colombo Port City and for online education and healthcare services supplied by non-residents, and it applies VAT to other services that non-residents supply through electronic platforms.