Sri Lanka

Corporate - Group taxation

Last reviewed - 17 February 2020

There are no special provisions for taxation of companies in a group in Sri Lanka. Each company is taxed independently of others in the group.

Transfer pricing

Any income, gains, and profits arising, derived, or accruing from, or any loss incurred in, any transaction entered into between two associated enterprises shall be ascertained with regard to the arm’s-length price.

Thin capitalisation

Interest payments (financial cost) made to any person are restricted to the debt-to-equity ratio of 3:1 for manufacturing companies and 4:1 for other companies. Any excess amount of finance costs arising due to this restriction can be carried forward and treated as incurred during any of the following six years of assessment, subject to the above limitation.

Controlled foreign companies (CFCs)

There are no provisions in the tax statute regarding CFCs.