FDI In Sri Lanka



The BOI Act provides for two types of investment approvals.

  • Under Section 17 of the Act, the BOI is empowered to grant special concessions to companies satisfying specific eligibility criteria which are designed to meet strategic economic objectives of the government. The mechanism through which such concessions are granted is the Agreement which modified exempts and waives identified laws in keeping with the BOI Regulations. These laws include Inland Revenue, Customs, Exchange Control and Import Control.
  • Approval under Section 16 of the BOI Act permits foreign investment entry to operate only under the 'normal laws' of the country; that is, for such enterprises, the provisions of the Inland Revenue, Customs and Exchange Control Laws shall apply. .
    For the purpose of granting approvals and incentives, companies incorporated under the Companies Act are treated equally regardless of whether the shareholding is controlled by nationals or non-nationals
BOI promotes the following sectors as priority sectors for FDI:
  • Tourism and Leisure
  • Infrastructure
  • Knowledge Services and Utilities
  • Apparel manufacturing and Export services
  • Agriculture and education
  • Promotes trans-shipment trading, international logistics services, operations of headquarters, off shore business.
  • Further, Non-Residents cannot invest in a company in Sri Lanka, carrying on any one or more of the following businesses:.
  • Money lending
  • Pawn Broking
  • Retail Trade with a capital investment of less than US$ 1 million
  • Coastal fishing
  • .

In certain other areas, investment by foreigners up to 40% of the share capital and in most of the other cases up to 100% of the share capital is allowed.

Share Investment Account

Investment in shares of a local company in Sri Lanka by a non-resident (individual or company) in areas of businesses permitted under the Exchange Control Law, can invest by bringing the investment in foreign currency (e.g. US Dollars) and opening Share Investment Rupee Account (SIA) at a licensed commercial bank in Sri Lanka.

  • Thereafter the shareholder can transfer in Sri Lanka Rupees from SIA the amount of his investment to the Sri Lankan Company and shares will subject to corporate procedure be issued to the shareholder by the company.
  • When the shareholder receives dividends from the Sri Lankan Company, he/it can take the amount of the dividends out of Sri Lanka in foreign currency through the SIA subject to payment of tax, if any, and obtaining tax clearance
  • If the shareholder decides on a future date to sell his/its shares, he/it can sell the same and take the sale proceeds out of Sri Lanka in foreign currency subject to tax clearance if required. The following persons are eligible for investors in SIA:
  • Non-resident Sri Lankan,
  • Citizens of foreign states whether resident in Sri Lanka or outside Sri Lanka,
  • Corporate bodies incorporated outside Sri Lanka, foreign institutional investors.
  • An SIA facilitates investments in Government Securities (Treasury Bills and Treasury Bonds),
  • Shares of companies incorporated in Sri Lanka and units of Unit Trusts in Sri Lanka.
  • All benefits earned out of the said investments could be credited into the same SIA and remitted outside Sri Lanka.
Resident Visa
Once an agreement is signed with the BOI, the BOI may facilitate the issuance of resident visas to relevant investors and qualifying employees. The company should submit the following documents along with the visa application in three sets to the BOI when applying for visas for expatriates.
  • Certified copy of BOI certificate(certified copy of the Letter of Approval for Sec. 16 projects)
  • Certified copy of BOI Agreement
  • Certified copy of Articles of Association
  • Certified copy of Form 1 (Details of directors)
  • Certified copy of Form 2A (Certificate of Incorporation)
  • Company Request Letter
Restrictions on Land Alienation
It was announced by the last Government of Sri Lanka in 2014 that in furtherance of the development policies promoted by the Government of Sri Lanka in the backdrop of a globally integrated environment, it considered deemed expedient and necessary to ensure the prudent use of land which is a limited resource, in a manner that preserves the national interest. The previous Government in 2014 enacted the Land (Restrictions on Alienation) Act No. 38 of 2014 imposing restrictions on the alienation of lands to foreigners, foreign companies and certain institutions with foreign shareholding, as specified in that Act. In the below circumstances, foreigners are exempt from the Land (Restrictions on Alienation) Act:
  • Diplomatic missions; International, Multi-lateral, and Bilateral organisations
  • Sri Lankan dual citizens
  • Any land, the title of which is transferred by intestacy, gift or testamentary disposition to a next of kin (who is a foreigner)
  • Investment in a project is more than $10 million
  • Minimum investment of $50 million in a large infrastructure project
  • Exporting companies with a minimum investment of $50 million
  • Investment of at least $10 million in land for large housing schemes, hospitals, hotels
  • A company has less than 50 percent foreign ownership
Land Lease Tax
The leasing of a land- to a foreigner or to a company incorporated in Sri Lanka under the Companies Act, where any foreign shareholding in such company, either direct or indirect, is fifty percent or above; or
  • Foreign company can be affected only subject to the payment of the Land Lease Tax imposed under the new law unless it is exempted under Section 7 of the Law.
  • The rate of the said Land Lease Tax is 15% of the total rental payable for the entire duration of the lease but the said tax is payable only at 7.5% of in certain categories specified in Section 6 (3) of the Law.
Resident Visas
Once an agreement is signed with the BOI, the BOI may facilitate the issuance of resident visas to relevant investors and qualifying employees. The company should submit the following documents along with the visa application in three sets to the BOI when applying for visas for expatriates.
  • Certified copy of BOI certificate(certified copy of the Letter of Approval for Sec. 16 projects)
  • Certified copy of BOI Agreement
  • Certified copy of Articles of Association
  • Certified copy of Form 1 (Details of directors)
  • Certified copy of Form 2A (Certificate of Incorporation)
  • Company Request Letter
Short Visit Visas

Foreign Nationals who wish to travel to Sri Lanka for a short visit (such as business conferences, discussions, training programs, tourism, medical treatments, sports, and cultural shows) can apply visas on-line through Electronic Travel Authorisation System.