Estonian Company Run from Sri Lanka: Tax Rules

Many people living in Sri Lanka form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Sri Lanka. The Sri Lankan Inland Revenue Act treats a company as resident not only when it is incorporated in Sri Lanka but also when the management and control of its affairs are exercised in Sri Lanka at any time during the year — and a resident is taxed on income wherever its source arises. On the owner side, an individual who lives in Sri Lanka or is present there for 183 days in a twelve-month period is resident. And there is no tax treaty between Estonia and Sri Lanka. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Sri Lankan tax adviser before you form or buy the company. We read the Inland Revenue Act, No. 24 of 2017 in the consolidated text published by the Sri Lankan Inland Revenue Department on ird.gov.lk (amendments up to 31 March 2025) — which the Department itself calls a convenient reference, not a statutory consolidation — together with the Inland Revenue (Amendment) Act, No. 11 of 2026, on 22 October 2026.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Sri Lanka: the company side

Management and control. A company is resident in Sri Lanka for a year of assessment if it is incorporated or formed under the laws of Sri Lanka, if it is registered or its principal office is in Sri Lanka, or if at any time during the year the management and control of its affairs are exercised in Sri Lanka (Inland Revenue Act, section 69(4)).
Income from everywhere. A resident person's assessable income is its income for the year wherever the source arises; a non-resident's only to the extent that it arises in or is derived from a source in Sri Lanka (section 4).
The rate. The taxable income of a company is taxed at 30 percent with effect from 1 April 2023, subject to the special rates of the same paragraph (First Schedule, paragraph 2(1)).

An Estonian OÜ is incorporated in Estonia. If its management and control are exercised by you in Sri Lanka, even at one point in the year, whether it is resident in Sri Lanka is the question section 69(4) raises. Your Sri Lankan tax adviser answers it with the facts of your case.

In Sri Lanka: the owner side

Resident. An individual is resident for a year of assessment if the individual resides in Sri Lanka, or is present in Sri Lanka during the year for periods amounting to 183 days or more in any twelve-month period that begins or ends in the year (section 69(1)).
Investor visa. Since the 2026 amendment, an individual holding an Investor Category Residence Visa is not resident in Sri Lanka for the year (section 69(1A), inserted by the Inland Revenue (Amendment) Act, No. 11 of 2026).

The consolidated text we read has no controlled foreign company rule; we found none. How a dividend or a board fee from the Estonian company is taxed in your hands in Sri Lanka is a question for your Sri Lankan tax adviser.

No tax treaty between Estonia and Sri Lanka

Sri Lanka is not on the list of Estonia's tax treaties published by the Estonian Ministry of Finance. So no treaty decides which country a company resident in both is resident of, and no treaty limits the tax either country charges on dividends or board fees. Each country applies its own law; whether and how double taxation is relieved then depends on each country's domestic rules — a question for your Sri Lankan tax adviser. We do not give that ruling.

What to decide before you form or buy the company

Where the company is controlled. Management and control exercised in Sri Lanka at any time in the year bring in section 69(4).
Where you live. Living in Sri Lanka, or 183 days there in a twelve-month period, makes you resident under section 69(1).
How you take money out. A dividend and a board fee are different kinds of income for both countries.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Sri Lankan tax returns and Sri Lankan tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

The two company forms side by side — shareholders, shares, transfer and the company tax: Estonian OÜ or Sri Lankan company.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Sri Lankan tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Sri Lanka if I run it from Sri Lanka?

It can be. Sri Lanka treats a company as resident when the management and control of its affairs are exercised in Sri Lanka at any time during the year (Inland Revenue Act, section 69(4)), and a resident is taxed on income wherever its source arises (section 4); the company rate is 30 percent (First Schedule, paragraph 2(1)). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). There is no tax treaty between Estonia and Sri Lanka, so no treaty decides a company resident in both. An individual who lives in Sri Lanka or is present for 183 days in a twelve-month period is resident (section 69(1)). Ask a Sri Lankan tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Sri Lanka: what is taxed where