{"id":26260,"date":"2025-08-15T17:13:59","date_gmt":"2025-08-15T11:43:59","guid":{"rendered":"https:\/\/simplebooks.com\/srilanka\/?p=26260"},"modified":"2025-09-24T21:06:12","modified_gmt":"2025-09-24T15:36:12","slug":"corporate-tax-rate-in-sri-lanka","status":"publish","type":"post","link":"https:\/\/simplebooks.com\/srilanka\/corporate-tax-rate-in-sri-lanka","title":{"rendered":"Corporate Income Tax in Sri Lanka- A Simple Guide (2025)"},"content":{"rendered":"\n

Do you have to file a tax return? You may have questions about whether you have to pay and file taxes. However, after reading this blog, all your questions regarding Corporate taxes will be answered. You’re in the right place to stay ahead in the corporate tax landscape. Let\u2019s explore corporate tax in Sri Lanka to get a better understanding using current information<\/strong>.  <\/p>\n\n\n\n

What is corporate tax?<\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n

You are required to pay corporate income tax on your company\u2019s net profit, that is, “The profit remaining after deducting all allowable business expenses” (Taxable income)<\/p>\n\n\n\n

Paying your taxes is not just a legal obligation; it also contributes to building a stronger nation and creating a better future for the next generation. <\/p>\n\n\n\n

Who needs to pay Corporate Income Tax? <\/h2>\n\n\n\n

If there\u2019s profit involved, the tax<\/strong> may be applied. If your business fits into one of the following categories, you are liable to pay corporate income tax on your profit.<\/strong> <\/p>\n\n\n\n

(a) Limited liability company (Resident or non-resident) <\/p>\n\n\n\n

(b) trust (Resident or non-resident)<\/p>\n\n\n\n

(c) Charitable institution<\/p>\n\n\n\n

(d) Unit trust or mutual fund<\/p>\n\n\n\n

(e) Non-governmental organization<\/p>\n\n\n\n

(f)  Public corporation<\/p>\n\n\n\n

(g) Club, society, or association<\/p>\n\n\n\n

(h) Any government organization<\/p>\n\n\n\n

(i) Employees’ Trust Fund, Provident Fund, Pension Fund, Termination Fund, or Gratuity Fund<\/p>\n\n\n\n

(j)  Any other entity, excluding a partnership<\/p>\n\n\n\n

Corporate Tax Rates in Sri Lanka (2024\/2025) <\/h2>\n\n\n\n

Now, let\u2019s talk about numbers. As a business owner, understanding your tax rate is key to staying ahead. Take note that the standard corporate tax is 30%<\/strong> but it can vary depending on the type of business and industry.  Always check your industry and income type with the IRD<\/strong> to know the exact rate that you will have to pay.<\/p>\n\n\n\n

Type of Business<\/td>Tax rate<\/td><\/tr>
Companies<\/td>30% (Standard)<\/td><\/tr>
Trust<\/td>30%<\/td><\/tr>
Unit Trust and Mutual Fund<\/td>30%<\/td><\/tr>
Non-Government Organizations (including amounts received by way of grant, donation, contribution, or any other manner under section 68 of the IRA)<\/td>30%<\/td><\/tr>
Betting & Gaming<\/td>40%<\/td><\/tr>
Manufacture and sale, or import and sale of any liquor or tobacco product<\/td>40%<\/td><\/tr>
Tax Rate for Employee\u2019s Trust Funds, Provident, Pension or Gratuity Funds, and Termination Funds.<\/td>14% (standard) \/ 30% (certain income)<\/td><\/tr>
Dividend<\/td>15%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Now, based on the industry\u2019s rate, if you\u2019re liable to pay tax, the next step is to pay the taxes on time. Register with the IRD, find out your rate, and follow the steps<\/strong> to pay on time. No need to worry, it\u2019s easier than you think. <\/p>\n\n\n\n

How to compute the Taxable profit<\/h2>\n\n\n\n

You might think that taxable profit is the net profit computed from the Income Statement. NO, taxable profit is calculated by adding all the disallowable expenses and deducting all allowable expenses from your net profit. Sounds confusing? Let us explain the Allowable expenses and Disallowable expenses in this section.<\/p>\n\n\n\n

\n
<\/div>\n\n\n\n
<\/div>\n<\/div>\n\n\n\n
Adjustment\/Detail<\/strong><\/td>(+)<\/strong><\/td>(-)<\/strong><\/td><\/tr>
Accounting profit before tax<\/td>XXXX<\/td>–<\/td><\/tr>
AdjustmentDisallowed expenditure<\/td>XXX<\/td>–<\/td><\/tr>
Adjustment Income or Taxable expenses<\/td>XXX<\/td>XXX<\/td><\/tr>
<\/td>XXXX<\/td>XXX<\/td><\/tr>
Adjusted Profit\/(Loss )for tax purposes<\/td>XXXXX<\/td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

 Allowable expenses (Section 10)<\/h3>\n\n\n\n

There are some expenses that you have not deducted as expenses in your company’s Income Statement. However, those expenses are deducted from your net profit when calculating Taxable Income<\/strong>. Such expenses are known as Allowable expenses. The following are the Disallowable Expenses.<\/p>\n\n\n\n

    \n
  1.  Domestic expenses (Sec. 197).<\/li>\n\n\n\n
  2.  Tax payable under this Act and taxes or other levies specified by the CGIR<\/li>\n\n\n\n
  3.  Interest, penalties, and fines payable for breach of any written law in any country,<\/li>\n\n\n\n
  4.  Expenditure incurred in deriving exempt or final WHT amounts, <\/li>\n\n\n\n
  5.  Retirement contributions (by the employer): (if the benefit is taxed on the employee or contributed to a fund approved by the CGIR, such contributions are allowed)<\/li>\n\n\n\n
  6.  Dividends of a company, <\/li>\n\n\n\n
  7.  Entertainment expenses or outlays,<\/li>\n\n\n\n
  8. Reserves or provisions,<\/li>\n\n\n\n
  9.  Expenses incurred on lotteries, betting, or gambling, unless in the course of conducting such a business. <\/li>\n\n\n\n
  10.  Payment for which the person is required to withhold tax,  deduction shall not be allowed for the respective expenditure  until the tax is paid <\/li>\n<\/ol>\n\n\n\n

    Disallowable Expenses <\/h3>\n\n\n\n

    There are some expenses that you have deducted from your company’s Income Statement. However, those expenses can be added to your net profit when calculating Taxable<\/strong> Income.  Such expenses are known as Disallowable expenses. The following are the Allowable Expenses.<\/p>\n\n\n\n

      \n
    1. Interest Expenses (Section 12) <\/li>\n\n\n\n
    2. Allowance for trading stocks (Section 13) <\/li>\n\n\n\n
    3. Repairs and improvements (Section 14)<\/li>\n\n\n\n
    4. Research and Development expenses and agricultural startup expenses (Section 15) <\/li>\n\n\n\n
    5. Capital allowances and balancing allowances (Section 16) <\/li>\n\n\n\n
    6. Losses on realization of business assets and liabilities (Section 17)<\/li>\n\n\n\n
    7. Deductible amount of financial cost (Section 18) <\/li>\n\n\n\n
    8. Business or investment losses (Section 19)<\/li>\n<\/ol>\n\n\n\n

      Check out the IRD Act<\/a> for further clarification.<\/p>\n\n\n\n

      Tax Installments and Payments<\/h2>\n\n\n\n

      Mark your calendar, because staying ahead starts with knowing your important deadlines. You can pay your tax by breaking it down into smaller, easier payments throughout the year in quarterly installments for the 2024\/2025 assessment year.<\/strong><\/p>\n\n\n\n

      \"\"<\/figure>\n\n\n\n
                  Installment<\/td>Time Period<\/td>Due date (On or before)<\/td>Payment Code<\/td><\/tr>
      1<\/td>April 2024 to June 2024<\/td>15th of August 2024<\/td>24251<\/td><\/tr>
      2<\/td>July 2024 to September 2024<\/td>15th of November 2024<\/td>24252<\/td><\/tr>
      3<\/td>October 2024 to December 2024<\/td>15th of February 2025<\/td>24253<\/td><\/tr>
      4<\/td>January 2025 to March 2025<\/td>15th of May 2025<\/td>24254<\/td><\/tr>
      Balance Payment (last day to pay)<\/td>For the year ending 2024\/25<\/td>30th September 2025<\/td>24250<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Tax Filing: When & How  <\/h2>\n\n\n\n

      When to file your taxes <\/h3>\n\n\n\n

      You have to file your corporate income tax every year without fail. You need to submit your return on or before 30th November 2025 for the financial year ending 31st March 2025 (2024\/25 assessment year).<\/strong> <\/p>\n\n\n\n

      However, submitting early will make life easier for both you and the Inland Revenue Department (IRD), so don’t wait till the last minute!<\/p>\n\n\n\n

      How to file your tax return <\/h3>\n\n\n\n

      Do you know that now you need no more paper forms? You have to pay your taxes online via the IRD website and use their e-filing system<\/strong> (Electronically filing returns). And it is a must to apply via the IRD’s e-filing system. It’s simple and efficient! Everything is set up and easy for you to log in and submit everything electronically. <\/p>\n\n\n\n

      If you want to get more information on Corporate Income Tax filing, <\/strong>click here.<\/strong><\/a><\/p>\n\n\n\n

      Submission of the returns <\/h2>\n\n\n\n

      You can now easily submit your completed tax return and all the necessary documents online using the IRD\u2019s e-filing system<\/strong>. Just visit their website, upload everything, and you\u2019re done. There\u2019s no fuss and no stress!<\/p>\n\n\n\n

      You have to file through e-filing, which is mandatory for all corporate taxpayers, and use the IRD portal: E-services-log in for companies.<\/a><\/p>\n\n\n\n

      (i)     Audited financial statements<\/p>\n\n\n\n

      (ii)    Tax computation statement or Schedule 8 of the specified forms<\/p>\n\n\n\n

      (iii)    Withholding tax or Advance Income Tax (if claimed), verified schedules on CSV format (uploading is compulsory if the number of items is more than 20)<\/p>\n\n\n\n

      (iv)  Separate certificates of the person who prepared the return or part of the return for a payment<\/p>\n\n\n\n

      (v)      Transfer pricing disclosure form in PDF\/JPG with Excel format (if applicable)<\/p>\n\n\n\n

      (vi)     Any other required documents and certificates<\/p>\n\n\n\n

      Penalties You Don\u2019t Want to Face  <\/h2>\n\n\n\n

      Here\u2019s what happens if you miss a deadline or make a mistake. Remember this one! Making late payments or failing to file tax returns will make you pay penalties<\/strong>. But the good news is that penalties can be completely avoided by proper planning and timely action. Let’s see how IRD imposes penalties for late payments and failing to file tax returns.<\/p>\n\n\n\n

      \"\"<\/figure>\n\n\n\n

      Penalty for late payments <\/h3>\n\n\n\n