Sri Lanka

Corporate - Withholding taxes

Last reviewed - 02 August 2023

Resident companies are required to withhold tax on dividend interest, discount, charge, natural resource payment, rent, royalty, premium, or pay amounts as winnings from a lottery, reward, betting, or gambling, and where the payment or allocation has a source in Sri Lanka paid to a non-resident person.

Every bank and financial institution is required to withhold income tax at 5% on the amount of any interest paid to a non-resident person on any sum of money deposited with it. The depositor is entitled to receive a certificate setting out the gross amount of interest, the amount of tax withheld, and the net amount of interest paid. With respect to Treasury bills and Treasury bonds issued by the Central Bank, no WHT is deductible at the time of the sale of the Treasury bills and Treasury bonds by the Central Bank in the primary market.

Payment WHT rate (%)
Prior to 31 December 2019 1 April 2020 to 31 December 2022 After 1 January 2023
Dividends paid by a resident company:    
To a resident payee 14 At the rate given by the payee  15
To a non-resident payee (NRP) 14 Exempt (with effect from 1 January 2020) 15
Interest or discount paid:  
To a resident payee 5 At the rate given by the payee  5
To a non-resident payee 5 5 5 (interest on loans given by NRP is exempt)
WHT is not applied to interest or discount paid to any person on a Government Security, Treasury Bond or Treasury Bill      
Royalty paid:  
      To a resident payee 14 At the rate given by the payee 14
      To a non-resident payee 14 14 14
Rent paid:    
To a resident payee 10 At the rate given by the payee 10 (only if the rent exceeds LKR 100,000 per month)
To a non-resident payee 14 14 14
Sale price payable to the seller of any gem sold at an auction conducted by the National Gem & Jewellery Authority (to both resident and non-resident payees) 2.5 2.5 2.5
Winnings from a lottery, reward, betting, and gambling (to both resident and non-resident payees) 14 14 14
Fees for personal and other specified services paid:      
To a resident payeee 5 - 5 (only if the rent exceeds LKR 100,000 per month)
To a non-resident payee  14 14  14
Payments to non-resident payee with respect to land, sea, air transport or telecommunication service 2 2 2

Treaty WHT rates

Currently, Sri Lanka has entered into 44 DTTs as set out below:

Recipient WHT (%)
Dividends Interest Royalties
Treaty (9):      
Australia 15 10 10
Bangladesh 15 15 15
Belarus 7.5/10 (7) 10 10
Belgium 15 10 10
Canada 15 15 10
China 10 10 10
Denmark 15 10 10
Finland 15 10 10
France 15 10 0/10 (1)
Germany 15 10 10
Hong Kong (4) - - -
India 7.5 10 10
Indonesia 15 15 15
Iran 10 10 8
Italy 15 10 10
Japan 0 15 (2) 0/7.5 (1, 3)
Korea, Republic of 10/15 (5) 10 10
Kuwait (4) - - -
Luxembourg 7.5/10 (7) 10 10
Malaysia 15 10 10
Mauritius 10/15 (6) 10 (2) 10
Nepal 15 10/15 (8) 15
Netherlands 10/15 (5) 10 (2) 10
Norway 15 10 0/10 (1)
Oman (4) - - -
Pakistan 15 10 20
Palestine 10 10 10
Philippines 10 10 10
Poland 15 10 10
Qatar 10 10 10
Romania 12.5 10 10
Russia 10/15 (5) 10 10
Saudi Arabia - - -
Seychelles 7.5/10 (7) 10 10
Singapore 7.5/10 (7) 10 10
Sweden 15 10 10
Switzerland 10/15 (5) 10 10
Thailand 15 10 15
United Arab Emirates 10 10 10
United Kingdom 15 10 10
United States 15 10 10
Vietnam 10 10 15

Notes

  1. 0% for copyright royalties.
  2. 0% in certain circumstances.
  3. 50% of normal tax, which is 7.5%.
  4. These treaties are limited to the avoidance of double taxation of income from international transport by air.
  5. 10% applies if the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends. In all other cases, the rate is 15%.
  6. 10% applies if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends. In all other cases, the rate is 15%.
  7. 7.5% of the gross amount of the dividends if the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends.
  8. 10% applies to banking business only.
  9. When the treaty rate is higher than the rate specified by the domestic tax statute, the lower rate can be applied subject to obtaining a confirmation from the Business Consultation Unit of the tax authority.