Employment Cost Calculator for Sri Lanka
Calculate your complete hiring costs for Sri Lanka employees, including payroll taxes, social security contributions, employee benefits, and management fees. This salary calculator provides accurate employer cost estimates for informed hiring decisions.
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Employment Cost Breakdown
Select a country and enter a salary to see the employment cost breakdown
Employer Tax Contributions
| Tax Type | Rate | Base |
|---|---|---|
| PAYE (Pay-As-You-Earn) / APIT (Advanced Personal Income Tax) | Progressive rates (6% to 36%) | Employee's total taxable income after threshold |
| Employees' Provident Fund (EPF) | 12% | Employee's total monthly earnings |
| Employees' Trust Fund (ETF) | 3% | Employee's total monthly earnings |
Filing & Compliance
- PAYE/APIT: Remit to Inland Revenue Department by the 15th day of the following month. File monthly returns.
- EPF & ETF: Remit contributions to respective funds by the 15th day of the month following the contribution due month. The deadline for EPF is the last working day of the following month. The deadline for ETF is the last working day of the succeeding month.
- Annual PAYE Returns: Submit to the IRD, summarizing remuneration and tax withheld for each employee.
Sri Lanka's employee tax system, known as Advance Personal Income Tax (APIT), applies to employment income above a certain threshold.
Advance Personal Income Tax (APIT)
APIT is deducted at the source by employers and remitted to the Inland Revenue Department. As of April 1, 2025, the tax-free allowance is LKR 150,000 monthly (LKR 1.8 million annually). The tax brackets are as follows:
- 0%: Monthly income up to LKR 150,000
- 6%: LKR 150,001 – LKR 233,333
- 12%: LKR 233,334 – LKR 275,000
- 18%: LKR 275,001 – LKR 316,667
- 24%: LKR 316,668 – LKR 358,333
- 30%: LKR 358,334 – LKR 400,000
- 36%: Above LKR 400,000
Employer Responsibilities
Employers are responsible for deducting the correct APIT amount each month based on the employee's earnings and the prevailing tax rates. This deducted amount must be remitted to the Inland Revenue Department by the 15th of the following month. Employers also have yearly filing requirements. Specifically, the annual APIT return is due on April 30th of the following assessment year.
Other Tax Implications for Employers
Besides APIT, other taxes relevant to employers in Sri Lanka include corporate taxes, withholding taxes, and contributions to social security. Corporate tax rates are subject to change; for example, rates for specific sectors like betting, gaming, tobacco, and liquor increased from 40% to 45% starting April 1, 2025. Withholding tax on interest and discounts also rose from 5% to 10% from the same date. Furthermore, employers generally contribute approximately 20% of the employee's salary toward social security and other benefits.
Important Considerations for 2025 and Beyond
Changes to the tax regulations occur regularly, as seen with the amendments to APIT, corporate taxes, and withholding tax effective April 1, 2025. It's essential to stay updated on the latest regulations and utilize available resources like tax calculators and advisors to ensure accurate compliance.
