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Sri Lanka Payroll Outsourcing

New Horizons will simplify and fast-track your expansion into Sri Lanka

Establishing and managing payroll in Sri Lanka

Sri Lanka is a unique and fascinating country, located close to India. It has a diverse population of more than 20 million people, and its varied colonial past as a colony of several European countries means many languages and cultures are active throughout the nation. This diversity, along with the potential for economic growth, make Sri Lanka an exciting destination for foreign organizations looking to expand their operations.

If your organization is interested in establishing a presence in Sri Lanka, an important step will be hiring locally and setting up a Sri Lanka payroll. This process can be difficult to follow for many organizations, and this can cause significant delays.

At New Horizons, we specialize in helping businesses expand internationally, including into Sri Lanka. Our Sri Lanka payroll outsourcing setup and management service is designed specifically to give clients a faster, more reliable route of entry into Sri Lankan employment, ensuring you operate in full compliance with local regulations, whether or not you have an entity in the country.

Why choose the New Horizons payroll solution?

If you have an entity

Does your organization have an established entity in Sri Lanka? We can help you to create and run your payroll in Sri Lanka, leaving you to focus all of your efforts on the job of expansion.

If you don’t have an entity

If your organization does not yet have a registered entity in Sri Lanka, we can provide our Sri Lanka PEO to act as employer of record for your hirees. Additionally, we can handle the setup and management of your payroll.

This is a low-risk and flexible option, leaving the difficult compliance and administrative work to us and freeing your organization to focus on a successful expansion.

Grow your business in Sri Lanka with confidence

Reliable delivery

We guarantee that all payments will be on time, your data will be secure, and you can be up and running within just 48 hours.

Established presence

Our Sri Lanka subsidiary will act as employer of record, offering you a presence in Sri Lanka for legal local employment.

Flexible solution

Our team will manage all of the admin, payroll, HR, and taxes, so you can focus on building your business in Sri Lanka.

Up-to-date compliance

With the everchanging Sri Lanka employment laws, we’ll ensure you stay fully compliant at all times.

Single point of contact

Our centralized service gives you a single point of contact, simplifying the entire in-country employment process.

Proven Sri Lanka Expertise

Our in-house teams of payroll and HR experts have already helped dozens of organizations expand countries all over Asia.

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Proven Sri Lanka Expertise

Our in-house teams of payroll and HR experts have already helped dozens of organizations expand into Sri Lanka.

Payroll in Sri Lanka Regulations

What are the withholding and taxation rules in Sri Lanka?

Sri Lankan income tax operates on a progressive system, so higher earners must pay a higher percentage of their salary. The rate ranges from 6% up to 18%. Residents are taxed on worldwide income, whereas non-residents are only taxed on Sri Lankan income. The Pay As You Earn (PAYE) system means that taxes are deducted before salaries are paid.

Additionally, the country has social security schemes that both employers and employees must pay towards. This is generally a rate of 12% and 8% of salary respectively.

The standard corporate tax rate is 28%, but there are also rates of 14% and 40% for certain types of businesses. 

Sickness & Maternity
5.25%
Disability & Death
1.75%
Retirement
2.00%
Layoff and Retirement Benefits
1.75%
Child Care
1.00%
Work Related Accidents (depends on the state)
0.50% – 3.00%
Housing Tax
5.00%
Payroll State Tax (depends on the state)
0.50% – 3.00%
Total Employment Cost
up to 22.75%
Sickness & Maternity
5.25%
Disability & Death
1.75%
Layoff and Retirement Benefits
3.15%
Total Employee Cost
10.15%
Sickness & Maternity
5.25%
Disability & Death
1.75%
Layoff and Retirement Benefits
3.15%
Total Employee Cost
10.15%
Up to 6,942.35 Pesos
1.92%
6,942.35 – 58,922.27 Pesos
6.40%
58,922.27 – 103,550.51 Pesos
10.88%
103,550.51 – 120,372.95 Pesos
16.00%
120,372.95 – 144,119.39 Pesos
17.92%
144,119.40 -290,667.83 Pesos
21.36%
290,667.83 – 458,132.39 Pesos
23.52%
458,132.39- 874,650.11 Pesos
30.00%
874,650.11 – 1,166,200.11 Pesos
32.00%
1,166,200.11 – 3,498,600.11 Pesos
34.00%
Over 3,498,600.11 Pesos
35.00%

Entitlement and termination rules in Sri Lanka

When hiring employees in Sri Lanka, we advise that you always provide a written contract of employment that clearly states all the entitlements and termination terms for each employee.

By law, workers are entitled to one month of notice upon termination after one or more years of employment. There may also be a requirement to pay severance, but the requirement and amount depend on a range of factors.

The regulations surrounding terminations in Sri Lanka are laid out in the Termination of Employment of Workmen (TEWA) Act.

How to establish Sri Lanka payroll outsourcing

In general, any organization trying to set up payroll in Sri Lanka is required to establish an entity in the country. This process can be very complicated and time-consuming, and it is important to stick to the regulations to avoid fines and legal issues.

Alternatively, you can outsource your payroll setup and management to New Horizons. 

We can provide our Sri Lanka PEO & Employer of Record for your new employees, so you don’t even need to have a registered entity in Sri Lanka. Additionally, we can establish your payroll and handle all the ongoing administration and compliance work, giving you the freedom to expand into the country more efficiently.

All-in-one solution for Sri Lanka payroll outsourcing

New Horizons’ Sri Lanka PEO and employer of record services enable your business to quickly and compliantly begin trading in Sri Lanka. This allows your business to commence operations in Sri Lanka in as little as 48 hours, and has the potential to save you up to 82% in expansion costs, whether or not you have a legal entity in the country.

New Horizons can also manage your company’s payroll, benefits, and expenses in Sri Lanka. Additionally, we can oversee HR duties, as well as employment and tax compliance. And as the only global PEO with an in-house recruitment team, New Horizons will source, hire, and onboard your local workforce.

Request a proposal

How can we help with your Sri Lanka payroll outsourcing?