Introduction: Expanding your business into Sri Lanka through foreign investments can be a lucrative venture. However, understanding the different avenues and regulatory processes is crucial for a successful entry. This article explores the various ways to register a company in Sri Lanka with foreign investments, focusing on the options provided by the Board of Investment (BOI).
Understanding the Options: When looking to register a company in Sri Lanka with foreign investments, the approach can vary based on factors such as investment value, specific requirements, and desired business structure. One common method is registering without BOI approval but adhering to guidelines set by the Exchange Controller of Sri Lanka.
Categories under BOI: The BOI offers two main categories for foreign investments Section 17 and Section 16.
- Section 17: Under Sec.17 of the BOI Law, the BOI has the authority to approve projects and enter into agreements with enterprises, providing exemptions from certain laws. Projects with an investment threshold of US$ 3 million or more can enjoy special incentives, including enhanced capital allowances. Those exceeding USD 50 million receive exemptions during the project implementation period.
- Section 16: Projects approved under Section 16 of the BOI Law facilitate foreign investment without fiscal concessions. These projects operate under the normal laws of the country and are subject to regulations. The minimum investment threshold for Section 16 is US$ 250,000, allowing for either 100% foreign investment or joint ventures with local collaboration.
Process and Facilitation by BOI: BOI assists companies under Section 16 in various ways, including the entry of foreign investment, setting up new companies with foreign shareholding, transferring/issuing new shares in existing non-BOI companies to foreign investors, and issuing visa recommendations.
Costs Involved: The BOI website provides detailed information on the charges associated with each step of the registration process. Understanding these costs is essential for effective financial planning.
Role of ASAC in BOI Approval: ASAC serves as the local agent for many Sri Lankan companies seeking BOI approval. While the process may be lengthy, it is a solid approach to entering the Sri Lankan economy with a robust company structure. However, it’s important to note that this method can be costly and time-consuming due to the necessary procedures.
Conclusion: Registering a company in Sri Lanka with foreign investments involves navigating the intricacies of BOI approval. By understanding the different categories, processes, costs, and the role of entities like ASAC, businesses can make informed decisions for a successful entry into the dynamic Sri Lankan market. Whether opting for fiscal concessions under Section 17 or following the normal laws under Section 16, the BOI provides avenues that suit various business needs.