At a glance
#Dates are for an example year end of Dec 31, 2025. Where local law moves a deadline on a weekend or national public holiday to the next working day, the date shown is already moved. Use the Deadlines tool for your own year end and thresholds.
Verified 2026-10-27. Tax authority: Department of Inland Revenue, Sri Lanka (IRD). Summaries are simplified; check the linked official source before relying on them.
The law
#The arm's length rules are sections 76 and 77 of the Inland Revenue Act, No. 24 of 2017 (rewritten by Act No. 10 of 2021, from 1 April 2018). Section 76 covers international transactions with associated enterprises. Section 77 covers local transactions in set cases only. The detail is in the Regulations on Transfer Pricing No. 02 of 2020 (Extraordinary Gazette No. 2217/7 of 2 March 2021, made under section 194), which apply from 1 April 2020 and replaced Gazette 2104/4 of 31 December 2018. For local transactions the regulations apply only where one party has a tax exemption or a different tax rate (for example a Board of Investment concession), or has losses brought forward. The year of assessment always runs 1 April to 31 March (s. 20). Sri Lanka is not bound by the OECD Guidelines, but the rules were drafted in line with them and the UN Manual.
Documentation
#A local file is required for any enterprise whose controlled transactions with associated enterprises exceed LKR 200 million in a year of assessment (dividends and loan principal are excluded). A master file is required where group revenue exceeds EUR 50 million (or the LKR equivalent), from year of assessment 2020/2021. Both must be in English for international transactions, and the local file is kept six years from the end of the year of assessment. They are not filed with the return. They must be handed over within 60 calendar days of a written request from the Commissioner-General (Regulation 6). Separately, an annual Transfer Pricing Disclosure Form (TPDF) is filed with the return of income where controlled transactions exceed LKR 200 million.
Methods
#CUP, resale price, cost plus, TNMM and profit split (Regulation 2). The most appropriate method must be used, chosen on the functions, assets and risks, data quality and comparability (Regulation 5). The arm's length range is the interquartile range (25th to 75th percentile). If the price is outside it, the median is used. Comparable data should be from the same year, and up to two earlier years may also be considered. Where nothing significant has changed, comparable searches can be updated every three years, with financials updated yearly.
Penalties
#Section 184 of the Act: up to 1% of the aggregate value of associated-enterprise transactions if required documents were not maintained; up to LKR 250,000 if required documents were not submitted; up to 2% of the aggregate value for non-disclosure of required information; and up to LKR 100,000 if documents were not submitted by the specified date. A penalty of 200% of the additional tax applies to concealment or inaccurate particulars. Section 185 penalties and the criminal provisions in Chapter XVIII can also apply (Regulation 6(f)).
Pillar Two
#No Pillar Two law has been enacted. The Inland Revenue Act and its amendments up to Act No. 11 of 2026 contain no income inclusion rule, undertaxed profits rule or domestic minimum top-up tax. The 2026 Budget (7 November 2025) did not propose one, and Sri Lanka is not on the OECD record of qualified Pillar Two laws. So there is no Sri Lankan GloBE filing and no deadline. Sri Lankan entities may still be covered by top-up tax and information returns filed in other countries.
Other rules
#The return of income is due eight months after the year of assessment ends, so 30 November for the year ended 31 March (s. 93(1)). The TPDF goes in with it. The Commissioner-General can extend the filing date if the company applies before the due date (s. 130). This does not extend the date to pay tax. The IRD also gave a general extension for year of assessment 2024/2025 (first to 8 December 2025, then to 31 December 2025, after Cyclone Ditwah). That was one-off, so the tool shows the standard date. CbC applies to groups with consolidated revenue of EUR 750 million or more, for reporting years beginning on or after 1 April 2020. Notification is due by 31 December of the reporting fiscal year and the report within 12 months of its last day (Regulation 6(e)). APAs are available (s. 76(5), Regulation 7) for up to four years of assessment. Safe harbour rules are allowed by the Act but none had been issued as of the OECD profile (June 2022). Regulation 10 lets the IRD make a corresponding adjustment when another country adjusts a Sri Lankan company's related-party prices under a tax treaty. Interest deductions are capped under s. 18. Disputes go to a Technical Review Committee and then the Dispute Resolution Panel (s. 78).
Filings and deadlines
#| # | Filing | When | Who | Source |
|---|---|---|---|---|
| 1 | CbC notification (Form TP/CbCR/01) Each entity says whether it is the ultimate or surrogate parent, or names the reporting entity and its residence, no later than 31 December of the reporting fiscal year (Regulation 6(e)(III)). For a calendar-year group that is the year end. For other groups it is the 31 December inside the reporting year (for example 31 December 2026 for a year to 31 March 2027). The parent can send one notice listing all Sri Lankan entities, by email to itp@ird.gov.lk. | Fixed calendar date (e.g. Dec 31, 2025) | Every Sri Lankan constituent entity of an MNE group with consolidated revenue of at least EUR 750 million (or the LKR equivalent) in the previous fiscal year. | Gazette 2217/7, Regulation 6(e)(III) |
| 2 | Return of income (companies), with audited accounts Due not later than eight months after the end of the year of assessment (s. 93(1)), so 30 November for the year to 31 March. A company with approval for a different 12-month accounting period (s. 20(2)) still files by the same date. The Commissioner-General may extend the date on an application made before the due date (s. 130); year of assessment 2024/2025 was extended for everyone to 31 December 2025 after Cyclone Ditwah. | 8 months after year end (e.g. Nov 30, 2026) | Every company. | Inland Revenue Act No. 24 of 2017, ss. 93(1), 20 and 130 (IRD consolidated text) |
| 3 | Transfer Pricing Disclosure Form (TPDF) Filed with the return of income in the format of Annexure IV, so the date is 30 November for the year to 31 March. Within the form, every category of controlled transaction above LKR 200 million needs all four columns; smaller categories need only columns I and II (Annexure V). Section 184 penalties apply. | With Return of income (companies), with audited accounts (e.g. Nov 30, 2026) | Enterprises whose controlled transactions with associated enterprises exceed LKR 200 million in the year of assessment (Regulation 6(d)). | Gazette 2217/7, Regulation 6(d) and Annexure V |
| 4 | Country-by-Country report Due no later than 12 months after the last day of the reporting fiscal year (Regulation 6(e)(V)), for years beginning on or after 1 April 2020. Filed with the Commissioner, International Tax Policy, by email to itp@ird.gov.lk or on disc. One entity may file for the group with the others' written consent. | 12 months after year end (e.g. Dec 31, 2026) | Sri Lankan ultimate parent entities, and Sri Lankan constituent entities where the parent does not file, has no qualifying competent authority agreement with Sri Lanka, or there is a systemic failure. EUR 750 million group revenue threshold. | Gazette 2217/7, Regulation 6(e)(V); IRD notice PN/TP/2022-01 |
| 5 | Local file (on request) Prepare it in English (for international transactions) and keep it six years from the end of the year of assessment. It is not filed. Hand it over within 60 calendar days of a written request from the Commissioner-General. No fixed preparation date is set, so having it ready by the return date is good practice. | Within 60 days of a tax authority request | Controlled transactions above LKR 200 million in a year of assessment, excluding dividends and loan principal. | Gazette 2217/7, Regulation 6(a) and 6(c) |
| 6 | Master file (on request) Keep it in English. It is not filed. Hand it over within 60 calendar days of a written request from the Commissioner-General. | Within 60 days of a tax authority request | Enterprises whose group revenue exceeds EUR 50 million (or the LKR equivalent) for the year of assessment, from 2020/2021. | Gazette 2217/7, Regulation 6(a) and 6(c) |
Official texts
#- Inland Revenue Act No. 24 of 2017, ss. 76, 77 and 184 (IRD consolidated text to 31 March 2025) (Not protected by copyright: section 8(b) of the Intellectual Property Act No. 36 of 2003 excludes any official text of a legislative, administrative or legal nature, and official translations of it, from copyright protection.)
- Regulations on Transfer Pricing No. 02 of 2020 (Extraordinary Gazette No. 2217/7, 2 March 2021) (Subsidiary legislation published in the Gazette is an official legislative text, so it is outside copyright under section 8(b) of the Intellectual Property Act No. 36 of 2003.)