Sri Lanka

Business accounting for CIT purposes should, unless otherwise specified by the tax statute, conform to Sri Lanka Financial Reporting Standards.

Inventory valuation

Inventories should be measured at the lower of cost and market value.

Capital gains

A gain made by a company on the realisation of an asset (which is the amount by which the sum of the consideration received for the asset or liability exceeds the cost of the asset or liability) is subject to tax at 10% up to 30 September 2022 and at 30% thereafter. Gains made on realisation of shares quoted in any official list published by any stock exchange licensed by the Securities and Exchange Commission of Sri Lanka are exempt from income tax. Such gains are subject to the share transaction levy chargeable at 0.3% on the seller as well as the buyer on the transaction value.

Dividend income

Resident company dividends paid on shares held by resident persons are assessable to the recipients. Dividends paid to non-resident persons during the period from 1 April 2020 to 30 September 2022 are exempt from income tax.

Interest income

Interest income, other than exempt interest income, forms part of the total assessable income.

Royalty income

Royalty income can be business income or investment income (based on the facts) that forms part of the total assessable income, which is liable to income tax.

Foreign income

Foreign income of a resident person forms part of the total assessable income.