Dec Tue 2021

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How to set up a BOI company in Sri Lanka

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Setting up a business in Sri Lanka as a foreigner or a foreign company requires a good understanding of how the Sri Lanka board of investment operates, the BOI act of Sri Lanka and the requirements to set up a BOI registered company in Sri Lanka. However, this process can be very complex and challenging to follow.

Through this article, we want to simplify how to set up a BOI Company in Sri Lanka, discuss the benefits of being registered with the BOI, and guide you through the steps you need to complete to start a BOI registered company in Sri Lanka.

Table of contents.
  1. What is BOI Sri Lanka?
  2. BOI Act Sri Lanka and other investment-related acts
  3. What is a BOI Company in Sri Lanka?
  4. What are the benefits of registering with the BOI Sri Lanka
  5. BOI Sri Lanka Minimum Investment
  6. BOI Zones in Sri Lanka
  7. Setting up a BOI Entity
  8. BOI Sri Lanka Application
  9. FAQs

What is BOI Sri Lanka?

The Board of Investment of Sri Lanka (BOI) is the main agency that approves any Foreign Direct Investments (FDI) or Local Investments. The BOI is governed by the Board of Investment Law No.4 of 1978 (BOI Law) and the various amendments to the same act. It was established in 1978 under the name ‘Greater Colombo Economic Commission’ and currently has over 1700 projects under its purview. The services provided to investors by the BOI include Import/Export Facilitation, Industrial Labor Relations, Legal Services, Engineering Approvals, and Environmental Clearances, to name a few.

In short, it is the agency that all foreign investments have to go through to obtain approval to commence business operations in Sri Lanka.

What is the BOI Act Sri Lanka?

The BOI act of Sri Lanka mainly refers to the Board of Investment Law No.4 of 1978 (BOI Law). However, there are six amendments to this act which you can access below.

  • Board of Investment of Sri Lanka (Amendment) Act No: 43 1980
  • Board of Investment of Sri Lanka (Amendment) Act No: 21 1983
  • Board of Investment of Sri Lanka (Amendment) Act No: 49 1992
  • Board of Investment of Sri Lanka (Amendment) Act No: 09 2002
  • Board of Investment of Sri Lanka (Amendment) Act No: 36 2009
  • Board of Investment of Sri Lanka (Amendment) Act No: 03 2012

Collectively, these acts form the legal framework for the BOI to operate. In addition, however, investors have to abide by many other acts and regulations when applying to become a BOI registered company or when running a business in Sri Lanka.

1. Finance Act No. 12 of 2012 (Hub Operations)

This act was created to promote Sri Lanka as a trading hub and mainly deals with trading and services activities. It also covers Free Ports and Bonded areas and set up the basis for transactions in convertible foreign currencies.

2. Inland Revenue Act No. 24 of 2017

This is the apex act related to taxation in Sri Lanka that applies to foreign and local investors. This act covers the corporate income tax rates and exemptions in specific sectors such as SMEs, Exports of Goods, Education, Tourism, Construction services, Healthcare services and Agro-processing. It also covers zero corporate income tax rates for Agro framing, IT and export of services

3. Strategic Development Projects Act No 14 of 2008

This act was introduced to cover projects which carry a national interest. These include projects, wher

  1. the strategic importance attached to the proposed provision of goods and services, which will be of benefit to the public ;
  2. there is a substantial inflow of foreign exchange to the country ;
  3. A substantial employment will be generated and the enhancement of the income-earning opportunities
  4. the envisaged transformation in terms of technology will be granted specific tax reliefs on a case by case basis

4. Foreign Exchange Act No. 12 of 2017

This act repealed the Exchange Control Act (Chapter 423) and introduced a more liberal exchange regime for Sri Lanka. This enabled investors to work with their preferred banks directly and encouraged the free flow of transfers through Inward Investment (IWS) accounts and Outward Investment Accounts.

In addition to this act there are some other limitations and exclusions that must be followed by residents outside Sri Lanka when Investing, acquiring or holding all classes of shares or an entitlement of shares issued by companies incorporated in Sri Lanka.

Exclusions:– Permission provided under the act does not apply in respect of shares of a company proposing to carry on any of the following businesses;

  • Pawnbroking
  • Retail trade with a capital of less than Five Million US Dollars
  • Coastal Fishing


a. Foreign investment in the areas below is only approved up to 40% of the stated capital of such a company or if there is a special approval granted by the Board of Investment of Sri Lanka for a higher percentage of foreign investment in any company, only up to such a higher percentage.

i. Production of goods where Sri Lanka’s exports are subject to internationally determined quota restrictions
ii. Growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices
iii. Mining and primary processing of non-renewable national resources
iv. Timber based industries using local timber
v. Deep Sea Fishing (as defined by the Ministry assigned the subject of Fisheries)
vi. Mass Communication
vii. Education
viii. Freight Forwarding
ix. Travel Agencies
x. Shipping Agencies

b. Investment in shares of a company carrying on any of the businesses specified below is only allowed up to the percentage of the stated capital of the company. Such percentages must also have either a general or special approval granted by the Government of Sri Lanka or any legal or administrative authority set up for the approval of foreign investments in such businesses

i. Air transportation;
ii. Coastal shipping (as defined by the Ministry assigned the subject of Shipping);
iii. Industrial enterprise in the Second Schedule of the Industrial Promotion Act, No. 46 of 1990, namely –
iv. Any industry manufacturing arms, ammunitions, explosives, military vehicles and equipment aircraft and other military hardware;
v. Any industry manufacturing poisons, narcotics, alcohols, dangerous drugs and toxic, hazardous or carcinogenic materials; any industry producing currency, coins or security documents;
vi. Large scale mechanized mining of gems;
vii. Lotteries

5. Land Policy (Land Act)

Sri Lanka’s Land policy is made up of several acts, namely,

  1. Land (Restrictions on Alienation) 2014
  2. Land (Restrictions on Alienation) (Amendment) 2017
  3. Land (Restrictions on Alienation) (Amendment) 2018

Under the provisions of these acts, Foreign investors can obtain land in Sri Lanka on a lease-hold basis, subject to a maximum tenure of 99 years, with no lease taxes charged. There are also provisions for outright transfer of ownership in situations where the foreign shareholding of a company is less than 50%. These acts also allow for Condominium properties to be purchased outright with no restrictions on nationality.

What is a BOI Company or BOI Approved project in Sri Lanka?

There are many terms for companies that have successfully gone through the approval of BOI of Sri Lanka. Some of the terms used include BOI company, BOI Companies in Sri Lanka, BOI registered company, BOI approved company, and BOI approved projects. Despite the minor variations in the terminology, they all mean the same thing; the company has fulfilled the necessary criteria to set up their business operations in Sri Lanka.

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What are the benefits of registering with the BOI Sri Lanka?

The BOI was established to promote FDI inflows by attracting business ventures. As a result, all BOI registered companies receive many incentives and benefits as part of the registration process. There are two main groups of incentives.

1. Fiscal Incentives

  1. Enhanced capital allowance ranging from 100%-150% in addition to normal depreciation for expenses over 3 Million USD incurred for depreciable assets
  2. Enhanced capital allowance of 200% in addition to normal depreciation for projects in the Northern Province
  3. Reduced Corporate Income Tax Rate of 14%-18% for specific sectors 
  4. Zero Corporate Income Tax Rate for Agro Farming, Informations technology and enabling services and export of services
  5. Dividend tax exemptions
  6. Port and Airport Levy Exemptions
  7. CESS Exemptions for Importation of Capital goods, raw materials and Tourism projects.
  8. Value Added Tax exemptions and deferments
  9. Custom Duty Exemptions

2. Non-fiscal Incentives

  1. 100% foreign equity and repatriation of earnings
  2. Access to BOI Zones
  3. Investor services such as engineering approvals, approval and facilitation for export/import documentation, and land provisions
  4. Expatriate entry visa, residence visa, temporary visa and visa extension facilitation

What is the BOI Sri Lanka Minimum Investment?

The Minimum investment for a BOI Sri Lanka project is US$ 250,000 to qualify as a section 16 project. However, investments above USD 3 million can be allowed as a section 17 project with special concessions.

1. BOI Guidelines for projects with concessions – approved under Section 17 of BOI Law

  1. Sec 17 projects that meet the minimum investment threshold of US$ 3 Mn upwards can enjoy special incentives concessions such as Corporate Tax concessions, Customs duty-free import of capital goods and raw materials, exemptions from the exchange control act.
  2. Section 17 projects may also be qualified for approval as a Strategic Development Project, in which case, they may be eligible for tax exemptions up to a maximum duration of 25 years.

2. BOI Guidelines for projects without concessions – approved under Section 16 of BOI Law

  1. The minimum investment requirement to qualify as a section 16 project is US$ 250,000. This can either be a 100% foreign investment or a joint venture investment with local collaboration. If an investor undertakes a trading activity, a minimum of US$ 5 Mn has to be remitted.
  2. Any projects approved under section 16 of BOI Law allow foreign investment entry without any fiscal concessions. These projects will be subjected to the country’s laws, Custom Laws and Exchange Control Regulations.
  3. The approvals are granted under this section only for
    1. Facilitating the entry of foreign investment
    2. Setting up a new company with foreign shareholding or
    3. Transferring or issuing new shares in an existing non BOI company to the foreign investors

BOI Zones in Sri Lanka

There are currently 14 BOI Export Processing Zones in Sri Lanka with plans for 3 additional BOI Zones in the future.

How to set up a BOI registered company in Sri Lanka?

How to set up a BOI registered company in Sri Lanka?

While the BOI facilitates foreign direct investments in Sri Lanka, there is still a lengthy process to be followed when doing this. For ease of reference, we will break it down into 3 phases.

Phase 1 – Submitting the BOI Sri Lanka Application and getting initial approval

Depending on how you want to seek approval, whether it is as a Section 16 project or a Section 17 project, you must submit two separate types of applications. To apply, you must be a shareholder in case of a new company or a shareholder’s representative who has a letter of authority to act on their behalf.

You must also pay the relevant application processing fees.

  • For Section 17 approvals with an investment less than US $ Mn. 25, the fee is US $ 150.00+12% VAT. If the investment is more than US $ Mn. 25, you are required to pay 0.01% of the proposed investment+12% VAT.
  • For Section 16 approvals, you must pay US $ 175.00+12% VAT.

Section 16 applications must also contain the following.

  1. Draft Articles of Association of the Company.
  2. Statement of names of the proposed shareholders and the number of shares held by each of them signed by the Applicant.
  3. Statement of the names and addresses of the proposed Directors signed by the Applicant, and Proof of inward remittance and Bank Credentials of the proposed investors.
  4. If the application is forwarded by a representative of the proposed new shareholders, they should submit a copy of a letter of authority to act on their behalf, which shall also indicate the individual, foreign equity contribution of each foreign collaborator.

Once you apply, the Project Screening Committee of the BOI assesses your application and, subject to meeting the criteria, grants you approval, including environmental/ engineering clearance in principle and approval from the land committee allocating BOI/Zone lands.

Following this approval, you are issued with a letter of Acknowledgment of Business Activity from the Appraisals department of the BOI. During this stage, you will also be assigned a project officer to help with the next steps.

Phase 2 – Incorporation of the company and formal approval
  1. Once you receive the letter of Acknowledgment of Business Activity, you can move forward to register your company in Sri Lanka. For more information on registering your company as a Pvt Ltd company in Sri Lanka, you can refer to our Business Registration in Sri Lanka – The Definitive Guide or Online Company Registration In Sri Lanka – A Step By Step Guide.
  2. During this phase, you need to obtain the following approvals.
    1. Project Activity (Preliminary Clearance of Project Activity, Environment Clearance, Site Clearance, Preliminary Clearance for Sourcing of raw materials, Rules of Origin Certificate, Import/Export License
    2. Site approval through the Engineering Approvals Department of BOI, including the Environmental Clearance process by the Environment department
  3. Once you obtain those approvals, you will be issued a formal approval letter.
  4. Following the formal letter of approval, you need to obtain the Preliminary Planning Clearance for the building and collect the draft agreement.
Phase 3 – Signing Agreement and commencement of operations
  1. Once you have everything in place, an agreement will be signed between you and the BOI, which will also set up an implementation period.
  2. Once the agreement is signed, you will be required to complete the below processes.
    1. Set up an Inward Investment Account with the Foreign Currency Banking Unit of a bank
    2. Registration for VAT/TIN (Inland Revenue Dept.)
    3. Development Permit (Building Approvals)
    4. Utilities -Electricity (Ceylon Electricity Board), -Water (National Water Supply & Drainage Board), -Telecommunication, (Sri Lanka Telecom/Private Company)
    5. Certificate of Conformity (COC)
    6. Import Export Registration (SL Customs)
    7. Recommendation for Work Permits & Residence Visa (Investment Appraisal Dept. –BOI)
    8. Obtain Work Permit & Residence Visa (Ministry of Defense & Dept. of Immigration & Emigration)
    9. Import (Duty-Free Items)/ Export -BOI Approval (Investment Appraisal Dept/ Engineering Dept.)
    10. -Registration (Investor Services Dept.)
    11. Certificate of Conformity (COC) Environment Protection License (EPL)
  3. Once you complete the above processes and obtain approvals, you can start commercial operations in Sri Lanka.

What are the charges by BOI Sri Lanka?

There are three main types of charges you have to pay the BOI Sri Lanka. In addition to this you also have to pay the VAT. These can be paid on the rupee equivalent as per the exchange rate at the time.

1. Application/Agreement Processing Charges

Source –

2. Annual Fees

Source –

3. Environment Protection Licensing Charges

What are the services accessible through the BOI Sri Lanka Website?

The Board of Investment Sri Lanka website, has a range of online services accessible to potential and ongoing investors.

  1. Job bank
  2. Apply Visa Online
  3. Web Submission
  4. Declarant Portal
  5. Land Bank
  6. Online Local Sales System
  7. Import export management online portal
  8. ID Issuing system

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How can Simplebooks help?

This article provides you with all the steps that you need to follow when applying for a BOI registration. However, we understand that you may need an expert to handle all of this for you without sacrificing your valuable time on this complex process.

We at Simplebooks have dedicated in-house experts to help with the BOI Sri Lanka registration process. Whether you need help to submit a new BOI application or with an already pending application we are here to help.

Contact us today for a free consultation!


What is a BOI project in Sri Lanka?

A BOI project is a project approved by the Board of Investment of Sri Lanka. This allows foreign companies to set up their businesses in Sri Lanka with certain incentives. The BOI also help streamline the process for foreign companies to set up business in Sri Lanka

What is BOI approval?

The BOI approval is a permission given by the Board of Investment of Sri Lanka to a company to start commercial operation in Sri Lanka. These can be either a section 16 approval or a section 17 approval which comes with added incentives.

How many BOI zones are in Sri Lanka?

There are currently 14 BOI zones in Sri Lanka with plans for another 3 in the pipeline. These include Export Processing Zones, Industrial Parks and Export Processing Parks.

How do I register with BOI?

Submit the relevant Section 16 or Section 17 application form along with the relevant fees.

How can Foreigners Invest in Sri Lanka?

Foreigners can invest in Sri Lanka in a number ways including setting up BOI approved companies, investing in debt securities, invest, acquire and hold shares of any incorporated company in Sri Lanka, Acquiring immovable property, and granting loans not exceeding 3 years to Sri Lankan companies. They can also Invest in debt securities of licensed commercial banks, licensed specialized banks, licensed finance companies, specialized leasing companies subject to the approval of the relevant regulatory authorities

Who is the Chairman of BOI Sri Lanka?

Raja Edirisooriya was appointed as the Chairman of the Board of Investment of Sri Lanka on December 14th, 2021.

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