Sri Lanka is becoming an increasingly attractive destination for foreign entrepreneurs—especially in the IT and tech sectors. With a strong digital talent pool, growing startup ecosystem, and relatively low entry barriers, many ask:
Can a foreigner start an IT company in Sri Lanka with 100% ownership?
Short answer: Yes, you can. And it’s easier than in many other South Asian countries.
In this blog, we’ll walk you through the key things you need to know before launching your IT business in Sri Lanka.
✅ Why Choose Sri Lanka for Your IT Startup?
The government of Sri Lanka actively supports foreign investment in the Information and Communication Technology (ICT) sector. Whether you’re launching a software development firm, a web design agency, or a SaaS company, the Sri Lankan market offers:
- 100% foreign ownership in IT businesses
- A young, English-speaking tech workforce
- Low cost of operations
- A strategic location for serving Asia, the Middle East, and beyond
- Supportive infrastructure and tax incentives for exports
🧾 Starting an IT Company in Sri Lanka: What to Look Into
Here’s a step-by-step guide on what you need to know and do:
1. Choose Your Business Structure
Most foreign entrepreneurs set up a Private Limited Company (Pvt Ltd):
- Allows 100% foreign ownership in IT and tech
- Requires at least one director and one shareholder (can be the same person)
- Must appoint a licensed Company Secretary
2. Register with the Registrar of Companies (ROC)
The process includes:
- Reserving a unique company name
- Submitting incorporation forms (Form 1, 18, 19) and your Articles of Association
- Getting a Tax Identification Number (TIN) from the Department of Inland Revenue
- Registering for VAT, if applicable
- Opening a local business bank account
🕐 Timeframe: 5–10 working days
💰 No minimum capital required (unless you apply for BOI incentives)
3. BOI Approval (Optional, but Recommended)
While not required, registering your company with the Board of Investment (BOI) gives several advantages:
- Visa support for you and foreign staff
- Tax holidays or reduced tax rates
- Duty-free import of equipment
- Simplified approval processes
This is especially useful if you plan to:
- Export IT services
- Hire many employees
- Repatriate profits abroad
4. Office Setup
You can launch with a physical office or start small with a virtual or coworking space.
Key locations for IT businesses:
- Colombo – The commercial capital with strong infrastructure
- Kandy – Emerging tech and education hub
- Port City Colombo – Special Economic Zone (SEZ) offering added incentives and regulatory freedom
5. Banking and Financial Setup
Open a local business bank account with a major bank like:
- Sampath Bank
- Commercial Bank
- HNB
- Bank of Ceylon
You’ll be able to:
- Receive international payments
- Pay staff and vendors
- Repatriate profits following Central Bank guidelines
6. Visa and Work Permit
To live and work in Sri Lanka:
- Apply for a Business Visa or Resident Visa through your own company
- You can also sponsor foreign employees under your business
7. Taxes and Compliance
- Corporate tax: 30% (as of 2025)
- IT export companies: May qualify for 0% or reduced tax
- VAT registration: Required if annual revenue exceeds LKR 80 million
- File annual returns and audited financial statements
✅ Pro Tip: Hire a local accountant or tax consultant early on.
8. Hiring and HR Considerations
Sri Lanka has a pool of tech talent with skills in:
- Web development
- Mobile app development
- UI/UX design
- Data science
- QA and DevOps
You can hire both local and foreign staff, but retaining top talent may require competitive packages.
📌 Summary: What You Need to Start an IT Business in Sri Lanka
| Requirement | Details |
|---|---|
| Ownership | ✅ 100% foreign ownership allowed in IT |
| Registration | Register with ROC; no minimum capital required |
| BOI Approval | Optional; provides tax breaks and visa support |
| Office | Physical, virtual, or SEZ (e.g., Port City Colombo) |
| Visa | Business or resident visa through your company |
| Taxes | 0–30% depending on whether you export services |
| Staff | No restriction on hiring locals or foreign professionals |
| Bank Account | Required for operations and profit repatriation |
🚀 Ready to Launch?
Starting an IT company in Sri Lanka is not only legal—it’s encouraged. With the right planning and setup, you can run a fully foreign-owned tech business in a growing market that offers cost efficiency, talent, and global access.
Thinking about getting started? Drop your questions in the comments or reach out for a custom startup checklist based on your business idea!
