Expense management module › Global expense management › Sri Lanka
Last updated : 11.05.2026
Expense rules in Sri Lanka.
Sri Lanka applies VAT at 18% (since 2024). Tax reform underway as part of IMF program.
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1Expense rules & reclaimable VAT
VAT 18% single rate. SSCL (Social Security Contribution Levy) 2.5% additional.
| Category | VAT | Reclaim | Cap / Note |
|---|---|---|---|
| Meals | 18% | Deductible | Tax invoice + TIN |
| Lodging | 18% | Deductible | Company TIN |
| Alcohol | 18% | Limited | Excluded from business meals |
| Fuel | 18% | Deductible | Tax invoice |
| Transport | 18% | Deductible | Taxi/PickMe/airfare |
| Client gifts | 18% | Non-deductible | Strict cap |
Receipt
Tax invoice
TIN mandatory
Meal cap
<= LKR 5,000/pers
Above: justify
SourcesSri Lanka IRD
2Mileage allowance
No official mileage scale. Actual reimbursement on receipts.
| Mode | Allowance | Cap | Note |
|---|---|---|---|
| Personal car | – | Fuel + tolls | On receipt |
| Company car | – | Fuel card | – |
| Taxi/PickMe | – | 100% on receipt | Receipt required |
Tracking
Logbook
Date, distance, purpose
SourcesSri Lanka IRD
3Per diem and travel allowances
No official tax per diem. Company policy by city: Colombo most expensive.
| Destination | Meal | Lodging / night | Daily rate |
|---|---|---|---|
| Colombo | LKR 2 500 | LKR 9 000 | LKR 15 000 |
| Kandy | LKR 2 000 | LKR 7 000 | LKR 11 000 |
| Galle | LKR 2 200 | LKR 7 500 | LKR 12 000 |
| Other cities | LKR 1 500 | LKR 5 500 | LKR 9 000 |
Conversion
~1 EUR = 350 LKR
Variable
SourcesSri Lanka IRD
4Foreign VAT recovery
VAT recovery limited to resident companies via monthly return. No non-resident recovery.
| Zone | Mechanism | Deadline | Method |
|---|---|---|---|
| Resident companies | VAT credit | Monthly (20th) | VAT return |
| Non-resident companies | None | – | Final cost |
| BOI / Free Zones | Exemption | On entry | BOI regime |
Statute of limitations
5 years
Keep invoices
SourcesSri Lanka IRD
Centralize your Sri Lanka expenses
Illizeo handles TIN invoices, LKR/EUR conversion and VAT compliance for your teams in Sri Lanka.
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