How to Pay Income Tax With No Employer in Sri Lanka

You took a remote job with a company in London, Sydney, or San Francisco. The salary lands in your account in full, no tax taken out. For a while it feels like a windfall. Then the question creeps in: surely someone is meant to be paying tax on this?

That someone is you. When no employer deducts your tax in Sri Lanka, the obligation doesn't disappear, it shifts onto your shoulders. And it works on a monthly clock, not the quarterly one freelancers use. This guide explains why you're on the hook, exactly when each payment is due, and how much to put aside so the bill never surprises you.

Why do I have to pay income tax myself if no employer deducts it?

If you've ever worked for a Sri Lankan company, tax was handled for you. Payroll worked out the tax on your salary, deducted it, and sent it to the Inland Revenue Department (IRD). That system is called APIT (Advance Personal Income Tax).

A foreign employer can't do that. They have no registered presence in Sri Lanka, no obligation to deduct Sri Lankan tax, and no mechanism to send it to the IRD. So your salary arrives whole.

Here's the part people miss: APIT is a form of withholding tax, and the law has a rule for when withholding doesn't happen. Under Section 86(4) of the Inland Revenue Act, when a withholding agent fails to withhold tax, the tax becomes payable by the person who received the income. That's you. The Act also classes you as a self-payer under Section 90(1)(b), because your employer isn't required to withhold.

So the responsibility is entirely yours. You get a TIN, you calculate the tax each month, you pay it, and you file a return at year end. You're doing what a payroll department would normally do for you.

When are my monthly tax payments due?

This is the part that catches people used to a quarterly rhythm. As a self-paying remote employee, you have a monthly obligation. The tax on each month's salary is due within 15 days after the end of that month.

That gives you twelve deadlines across the Year of Assessment (April 1 to March 31):

Contrast that with the four dates a freelancer deals with under the quarterly payment system. You have three times as many deadlines, so a calendar reminder matters more, not less.

How much should I set aside each month?

This is where the monthly system is actually kinder than it looks. Your tax is calculated on your cumulative income from April 1, not on each month in isolation. So the early months of the year are usually tax-free while your running total is still under the Rs. 1,800,000 personal relief.

Each month you work out the tax on your income so far, then subtract whatever you've already paid earlier in the year. The difference is that month's payment.

Let's walk through a real case. Say your salary converts to Rs. 500,000 a month (around Rs. 6,000,000 for the year). The rate structure is 0% up to Rs. 1,800,000, then 6% on the next Rs. 1,000,000, then 15% on the balance.

From October onward each new Rs. 500,000 of salary sits entirely in the 15% band, so the payment settles at a steady Rs. 75,000 a month for the rest of the year. Add it all up and the full-year tax is Rs. 540,000 on Rs. 6,000,000, an effective rate of just 9%.

The month-by-month cumulative math is fiddly to run by hand, especially with a different exchange rate each month. This is exactly the kind of running calculation a tool like Taxable keeps for you automatically.

What rate applies to my foreign salary?

Short version: a concessionary cap. After the Rs. 1,800,000 personal relief, the first Rs. 1,000,000 of cumulative income is taxed at 6%, and everything above Rs. 2,800,000 is capped at 15%. That cap applies because your salary comes in as foreign currency through a Sri Lankan bank.

One thing to be clear about: you can't deduct business expenses. The law treats you as an employee, not a business, so your internet bill, laptop, and home office don't come off your income the way they would for a freelancer. The only deductions are the personal relief and qualifying payments such as approved donations. For the full breakdown of how this rate compares to standard rates and to freelancer (ISE) treatment, see our foreign employment income guide.

How do I actually make the payment?

Three practical things to get right each month:

1. Convert at the right rate. Your foreign salary must be converted to rupees using the Central Bank of Sri Lanka (CBSL) buying rate on the date the money was credited to your account. Use the receipt date, not the date you were due to be paid.
2. Pay against your TIN. Every payment is made using the tax type Individual Income Tax (IIT), quoting your Taxpayer Identification Number. If you don't have a TIN yet, get one before your first payment. Our TIN guide walks through how.
3. Keep the cumulative running total. Because each month's payment is the cumulative tax minus what you've already paid, you need an accurate record of every prior month's income and payment.

What happens if I miss a monthly payment?

The cost of slipping is real, and with twelve deadlines there are more chances to slip.

The trap is the month you have a cash crunch and decide to "catch up next month." Interest starts immediately, and a missed month doesn't reset, it compounds against you while the next deadline is already coming. Treating the 15th as a hard date, every month, is far cheaper than catching up later.

Do I still file an annual return?

Yes. The twelve monthly payments are advances against your final liability, not a replacement for filing. After the tax year ends on March 31, your annual income tax return is due by November 30.

The return is where everything reconciles: your actual income for the year, the exchange rates you used each month, and the twelve payments you made. If your monthly payments covered your liability, there's nothing more to pay. If you under-paid in some months, you settle the balance then. Keeping clean monthly records is what makes that November return a quick formality instead of a reconstruction project.

Paying your own tax feels daunting the first time, but the system is more forgiving than it sounds. The early months are usually free, the rate is capped low, and the monthly amounts are small and predictable once you see the pattern. Get a TIN, set aside 15% from the start, and treat the 15th as sacred. Do that, and being your own payroll department is just a five-minute job each month.