Manage corporate tax of your company

This article aims to explain the basic income tax management requirements for companies in Sri Lanka. Every resident or non-resident limited liability company must file the Return of Income for the completed year of assessment with the Commissioner General within 8 months after the end of each year of assessment.

Year of assessment

Generally, the year of assessment in Sri Lanka is from April 1 to March 31 of the following year. This may be changed with the Commissioner General’s prior approval.

Tax rates

The standard corporate income tax rate is 30%. The 45% rate applies to betting and gaming and to liquor and tobacco, raised from 40% by the Inland Revenue (Amendment) Act, No. 02 of 2025 with effect from 1 April 2025. Guides still quoting 40% are out of date.

Service exports and foreign source income are no longer exempt. The exemption was removed with effect from 1 April 2025 and that income is now taxed at 15%, provided the service is rendered to a person to be utilised outside Sri Lanka, is paid in foreign currency and is remitted through a bank.

Worked examples

• A trading company with taxable income of Rs. 5,000,000 pays Rs. 1,500,000 at the standard 30% rate.
• A gaming company with the same taxable income of Rs. 5,000,000 pays Rs. 2,250,000 at the 45% rate — Rs. 750,000 more on identical profits.
• A company with taxable income of Rs. 20,000,000 at the standard rate pays Rs. 6,000,000, payable in quarterly instalments rather than as a single year-end payment.

Tax payments

Each company needs to pay income tax quarterly on an estimated basis as per the due dates in the table below.

The Statement of Estimated Tax Payable has been abolished. From the Year of Assessment 2026/2027, quarterly instalments are no longer based on your own estimate of the current year's profit. Each instalment is calculated as (A − C) ÷ B, where A is the gross income tax payable for the immediately preceding year of assessment, B is the number of instalments remaining including the current one (4, 3, 2, 1) and C is the tax already paid during the year, including WHT and AIT credits. For 2026/2027 that means the instalments are based on the tax liability of 2025/2026.

See Quarterly income tax instalments in Sri Lanka for the alternative bases, the declaration forms and the credit schedule deadlines.

Considering the tax year of assessment is 2024/2025 (April 01, 2024, to March 31, 2025)

Statement of estimated tax payable

The Statement of Estimated Tax (SET) has been discontinued by the Inland Revenue (Amendment) Act, No. 11 of 2026, notified in IRD Notice SEC/PN/IT/2026/02 of 8 June 2026. Companies no longer submit an estimated tax computation by August 15. Instalments are calculated from the preceding year's tax liability under the formula above.

A company with no taxable income in the preceding year, or which reasonably expects a lower taxable income in the current year, uses one of the alternative bases and must file Attachment 1 (Form SEC/2026/SA/01). A newly registered taxpayer files Attachment 2 (Form SEC/2026/SA/02) for its first year of assessment only.

Final tax payment

Companies need to prepare the full tax computation after the end of the assessment year.

Any final or remaining balance of tax, after the quarterly instalments, must be paid by September 30 — six months after the year end, under section 90 of the Inland Revenue Act, No. 24 of 2017. The Return of Income is a separate deadline and is due by November 30, eight months after the year end, under section 93.

Considering the tax year of assessment is 2024/2025 (April 01, 2024, to March 31, 2025), the balance tax was due by 30 September 2025 and the return by 30 November 2025. The tax payment code for the final tax is 24250.

Tax payments can be made through below methods to any branch of the Bank of Ceylon,

• By deposit cash
• By deposit pay order or bank draft
• Using online tax payments platform (OTPP)

Final return of income (Corporate Income Tax Return/CIT Return)

Each company must file their return of income with the Commissioner-General within 8 months after the end of each assessment year. For example, the return of income for the year ending on March 31, 2024 (2023/2024), must be filed by November 30, 2024.

Companies need to submit the return using the e-filing facilities provided by the Inland Revenue Department at www.ird.gov.lk.

Audited financial statements of the company must be included as a mandatory attachment with the return of income.