Sri Lanka is a South Asian country with a large population of over 21 million. Since the country was once ruled by the Portuguese, Dutch, and British, people speak a variety of languages, but Sinhalese and Tamil are the two most common, with English as the link language. If you’re planning an expansion to Sri Lanka, you can benefit from an English-speaking population as well as a large pool of candidates to choose from.
Despite the benefits of an expansion to Sri Lanka, you’ll also need to handle some more challenging aspects, such as setting up your Sri Lanka payroll. You can decide from several Sri Lanka payroll options, including Sri Lanka payroll outsourcing with Globalization Partners. Instead of worrying about your payroll, you can outsource with Globalization Partners. We’ll add your employees to our compliant payroll so that you don’t have to worry about taxes, employee payment, or related requirements.
Sri Lanka Payroll Taxes
Sri Lanka companies have to pay a corporate tax rate of 28%, but you may have tax rates up to 40% on profits depending on the type of business you run. Keep in mind that non-resident companies get taxed only on income in Sri Lanka. Employees will get taxed at a progressive income tax rate from 4-24% based on a progressive income tax rate. The country uses a Pay As You Earn (PAYE) system, so you need to deduct taxes right from employees’ paychecks.
Both employers and employees need to contribute to different social security programs — the Employees’ Provident Fund and the Employees’ Trust Fund. Typically, employees contribute 8%, and employers contribute 12%.
Sri Lanka Payroll Options
Sri Lanka has four different payroll options your company can choose from:
- Internal: An internal payroll structure is when you run your own payroll out of your Sri Lanka subsidiary. With this option, you’ll need a larger subsidiary with a full HR staff to help you handle compliance.
- Remote: If your parent company has many subsidiaries and one payroll, you can add your Sri Lanka employees to that payroll. Keep in mind, however, that every employee from a different country will have different regulations to follow.
- Sri Lanka payroll processing company: A Sri Lanka payroll processing company is one of two outsourcing options. A local company can handle your payroll for you, but your company will still be responsible for compliance.
- Sri Lanka payroll outsourcing: Choosing Sri Lanka payroll outsourcing with Globalization Partners is the only sure way to outsource your payroll along with all matters of compliance. Our team will add your employees to our payroll and act as the Employer of Record on your behalf.
Requirements to Set up Your Sri Lanka Payroll
Whenever you decide to set up your Sri Lanka payroll, you’ll need a subsidiary first. That subsidiary will allow you to hire employees, provide compensation and benefits, and run your payroll. However, many companies need weeks or months to incorporate, which sets back their timelines for hiring employees and working in the country. Working with Globalization Partners means you can use our Sri Lanka PEO to start working immediately while we handle compliance.
Entitlement and Termination Terms for Your Payroll
You can help create clear agreements between you and your employees if you establish entitlement and termination terms before you set up your Sri Lanka payroll. Employees can apply for relief under the Termination Act as long as they submit their application to the Commissioner of Labor within six months of the date of termination.
Trust the Globalization Partners Team
Globalization Partners can help you make the most of your expansion to Sri Lanka. Contact us today to learn more about Sri Lanka payroll outsourcing.