Checklist for starting a business in Sri Lanka

by Asif Nazeer on 08-11-2011 in Doing Business

 

Starting a business in Sri Lanka – a checklist
 
Starting a new business in Sri Lanka is easy. There are not so much hassles involved with process of registering. Also there are certain benefits for the investors. However, before starting a business in Sri Lanka you must keep in mind some quick facts. This article is all about to help you out. The information that I will share are of June, 2010. So it could be possible there are some minimal changes. But following these steps you can achieve all the facts that you want to before launching your business.
 
1. Talk to the Sri Lanka Board of Investment. 
2. Prepare your business proposal. 
3. Register your business with Government.
4. Find a business consultant locally 
5. Promote your business through local media. 
6. Create demand for your product and services through promotion. 
7. Analyze your income progress
8. Have continuous improvement procedures
 
Listen to professional advice only as you will not be misleaded in that case and always do a feasible research before investing your money.
 
For registration, you need to follow the steps that are given below: 
 
1 Pertain for approval name 3 days LKR 350 + 15% VAT
2 Register at the Companies Registry 3 days LKR 9550 + 15% VAT for registration fee + LKR 350 + 15% VAT 
3 Register with tax authorities to obtain a TIN 2 days no charge
4 Register with Department of Labor to obtain EPF and ETF registration 1 day to file and approximately one month for the ETF and EPF numbers to be issued no charge.
 
According to the Companies Act No.7 of 2007 the articles of association must be submitted in duplicate to the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar General of Companies is required for the articles of association. According to the new Companies Act, notary publics are no longer required to witness the signing of the articles of association. A charge of LKR 8500 as the registration form 1, and LKR 350 + 12% VAT for the other two forms 18 and 19 and the articles of association. The certificate of incorporation will be received in about 3 days. Under the new Companies Act, it is no longer required to confirm the principal directors and the situation of the registered office of the company within 14 days of incorporation. Moreover, the common seal was rendered optional.
 
The net procedure, which can be illustrated as the applicant or an authorized representative of the applicant must be physically present at the Inland Revenue Department to pick up and complete the application for a TIN number. The taxpayer identification number (TIN) and the VAT registration number (temporary) will be given within a day. To get enduring VAT registration, the candidate must present documents proving earnings of LKR 500,000 over 3 months. This is done along with income tax registration. The method takes 1–3 days.
 
After this, Companies must register with two funds, the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF). Both of the funds are government-owned and will be maintained by the Central bank. The employer must visit to the Ministry of Labor and should complete relevant forms to get registered with these funds. Companies in Sri Lanka also pay a gratuity to the employee who has been employed for more than 5 years. This is a provisional thing. If there are a number of members less than 15, then gratuity provisions are not applicable. It is not mandatory for the private companies to have the pension provision. Businesses that engage in activities of a dangerous nature should obtain special Factories Ordinance checkups. 
 
Normally, ETF and EPF issuance numbers take 4-6 months for processing. However, a number is assigned to the company upon application. Accordingly, the company has fulfilled its obligation and may remit monies to the department for ETF and EPF registration under the assigned number. 
 
It has been seen that a business at the beginning not offer immediate return. But the income steadily grows as the time passes through. The most successful sectors in Sri Lanka that I recognize are: Garment or textile industry, tea industry, rubber industry, software and tourism. Due to rapid growth of the economy of Sri Lanka and for many other facilities thousands of people from all parts of the world are showing interest in this small island. Skilled labor and friendly govt. policy really gives a lot of benefit to the investor.
 
So you have learned that how cross the legal hurdles and steady your ship for starting business in Sri Lanka. As I mentioned earlier before starting you business do not for to research on your projects feasibility. There are several scopes to invest in Sri Lanka, so if you have money then utilizes it properly. Hope this article helped you to collect all the information that you are searching for.
Leave a Comment