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| Sri Lanka |
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| Mapped in World Map |
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| Country Profile |
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| Sri Lanka is an island off the south-eastern cost shores of India, 880 km north of the
equator, in the Indian Ocean. Given below are some details of the country profile. |
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| Area |
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65,610 sq.km |
| Population - 2005 |
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19.7Mn |
| Human Development Index - 2005 |
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0.75 (min 0, max 1) |
| Life expectation - 2003 |
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74 Years |
| Literacy Rate % - 2003 |
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90% |
| GNP at Market Price - 2005 |
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23.3 US$ Bn |
| Per capita GDP - 2005 |
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1,191 US$ |
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| Sri Lankan BPO Industry |
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| In a recent survey revealed that the Sri Lanka was among the top rankers in terms of
suitability as a centre for BPO operations with numerous benefits at hand, together
with wide ranging incentives, offered by the government of Sri Lanka is poised to take off
as the emerging destination for setting up of offshore BPO operations. |
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| Given below are some comparative advantages of the country in relating to the
BPO Industry |
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- High Literacy Rate of 91%
- Possess linguistic adaptabilities
- Well-Developed business sectors
- Low wages structure
- Location Advantage
- Proximity to Indian Market
- Low cost of Logistics
- Time Advantage
- Developed Telecom Infrastructure
- Increasing resource pool of skilled IT labour force
- Special commitment and concessions by the government on the sector
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| Investment in Sri Lanka |
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| Foreign investment in the local equity market is opened to approved Country Funds and
Regional Funds, and Citizens of Foreign States (Whether resident in Sri Lanka or outside
Sri Lanka) and Sri Lankans resident outside Sri Lanka. Foreign investors can invest
up to 100 per cent of the issued capital of a limited company subject to certain
exclusions, limitations and conditions. |
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| All foreign investments should be channeled through the Board of Investment (BOI) of
Sri Lanka. BOI has its origins in the Greater Colombo Economic Commission (GCEC)
established in 1978. In 1992 the Commission was reconstituted as the Board of
Investment of Sri Lanka. |
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| Tax Legislations |
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| Sri Lanka has a transparent, low-tax regime, and has signed double taxation relief
agreements with 26 countries. These agreements provide for reduced tax rates on
dividends, interest and royalties. |
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| All Sri Lankan businesses, except for BOI companies (enterprises that qualify for BOI
incentives under Section 17 of BOI Act) and enterprises that qualify for special
concessions under the Inland Revenue Law, are liable to taxation. |
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| Resident and Non-Resident companies are liable to a corporate income tax of 35 per
cent. These rates are in line with those in other fast developing Asian economies.
BOI companies that meet specific criteria i.e. size of total investment, type of
investment and location of investment, qualify for tax holidays ranging from 5-12 years.
In addition, a concessionary rate of income tax of 15% up to a maximum period of 20
years is also extended to these companies. Maximum rate of 15% applicable if the
taxable profits are less than Rs. 5,000,000/- |
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| Resident individuals pay personal income tax on a sliding rate scale up to a maximum
of 35% of their income. The first Rs. 300,000 per annum is exempt from income tax.
Non-citizens of Sri Lanka who are employed in qualifying BOI companies pay a
concessionary tax of 15% of their Sri Lankan source income. |
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| Apart of the direct income taxes there are indirect taxes charged for taxable
suppliers. Main indirect taxes are Value Added Tax on value addition of products and
services at the varying rates of zero to 20 percent, Turnover tax on trading activities at
1 to 5 percent and custom duties on imports. |
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| Company Law |
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| Registered companies are governed by the Companies Act No 17 of 1982. The
following types of Companies can be established under the provisions of the Companies Act; |
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- Companies limited by shares;
- Companies limited by guarantee;
- Unlimited Companies;
- Off-Shore Companies.
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| Limited Liability Companies can also be classified as follows: |
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| Private Companies |
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| These are companies which have a minimum of 2 and a maximum of 50 members and which
restricts the right to transfer its shares and prohibits any invitation to the public to
subscribe to shares in the company. |
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| Public Companies |
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| In the case of public companies the minimum number of members are 7 and there is no
upper limit on the number of members. The accounts of Public Companies are opened
for inspection by the public, while the accounts of Private Companies are not, however,
private companies are required to file the Balance Sheet and audited reports with the
Registrar of Companies. |
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| Public Companies can be further classified into two categories: |
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- Quoted Public Companies - the shares of which are quoted in the stock market and they
are subject to the rules and regulations of the Colombo Stock Exchange.
- Unquoted Public Companies - the shares of which are not quoted in the stock market.
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| People's Companies |
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| These Companies should have a minimum of 50 members and also of 3 Directors holding at
least one share each. The nominal value of a share cannot exceed Rs. 10/- and no
member including his wife and minor child can hold more than ten percent of the issued
share capital. |
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| Accounting Standard Comparison |
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| The Institute of Chartered Accountants of Sri Lanka (ICASL) is the regulated body to
prepare Sri Lanka Accounting Standards (SLAS) and ICASL has given due regard to ISA
(International Accounting Standards) in preparing SLAS. |
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| The Sri Lanka Accounting and Auditing Standards Act No 15 of 1995 required all
Business Enterprises as defined by the Act to prepare and present financial statements in
accordance with SLASs. It also empowers ICASL to adopt suitable accounting
standards from time to time. These standards have legal effect once they have been
published in the Gazette. |
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| Comparison of Sri Lankan Accounting Standards with International
Accounting Standards. |
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Framework for the Preparation and Presentation of Financial
Statements |
Parentage (IAS Framework) |
| 3 |
Presentation of Financial Statements |
IAS 1 |
| 5 |
Inventories |
IAS 2 |
| 8 |
Depreciation Accounting |
IAS 4 |
| 9 |
Cash Flow Statements |
IAS 7 |
| 10 |
Net Profit or Loss or for the Period,
Fundamental Errors and Changes in Accounting Policies |
IAS 8 |
| 11 |
Research and Development Costs |
IAS 9
(superseded by IAS 38) |
| 12 |
Contingencies and Events Occurring After the
Balance Sheet Date |
IAS 10
(superseded by revised IAS 10 & IAS 37) |
| 13 |
Construction Contracts |
IAS 11 |
| 14 |
Accounting for Taxes on Income |
IAS 12
(superseded by revised IAS 12) |
| 16 |
Retirement Benefits Costs |
IAS 19
(superseded by revised IAS 19) |
| 18 |
Property, Plant and Equipment |
IAS 16
(superseded by revised IAS 1, 22, 26 & 37) |
| 19 |
Accounting for Leases |
IAS 17 |
| 20 |
Borrowing Costs |
IAS 23 |
| 21 |
The Effects of Changes in Foreign Exchange Rates |
IAS 21 |
| 22 |
Accounting for Investments |
IAS 25 |
| 23 |
Revenue Recognition and Disclosures in the
Financial Statements of Banks |
IAS 30 |
| 24 |
Accounting for Government Grants and Disclosure
of Government Assistance |
IAS 20 |
| 25 |
Business Combinations |
IAS 22
(superseded by revised IAS 12, 36, 37 & 38) |
| 26 |
Consolidated Financial Statements and Accounting
for Investments in Subsidiaries |
IAS 27 |
| 27 |
Accounting for Investments in Associates |
IAS 28
(superseded by revised IAS 36) |
| 28 |
Segment Reporting |
IAS 14 |
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Revenue |
IAS 18 |
| 30 |
Related Party Disclosures |
IAS 24 |
| 31 |
Financial Reporting of Interests in Joint
Ventures |
IAS 31
(superseded by revised IAS 36) |
| 32 |
Plantations |
IAS 41 |
| 33 |
Revenue Recognition and Disclosures in the
Financial Statements of Finance Companies |
IAS 30 |
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