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New look Colombo 2: UDA to acquire private land
A redevelopment and mixed development project on eight acres of land in Kompannaveediya will enable the Urban Development Authority to acquire private lands in underdeveloped or underserved areas of Colombo City, a gazette notification said. The project labelled as a pioneer concept for urban renewal is to be undertaken by a private company which will get tax concessions running into millions of rupees for project related work.
Details of the project have been gazetted by Investment Promotion Minister Lakshman Yapa Abeywardena The project estimated to cost around US$ 429.5 million including a foreign direct investment of US$ 130 million is to be undertaken by a company going by the name of M/s One-Colombo Project. But details of the company, who its partners are and its Board of Directors have not been mentioned in the gazette notification.
The gazette, however, states that the redevelopment of the area will “bring significant changes in the landscape of Colombo city through a higher standard of living associated with better quality of life to the habitants whilst the establishment of the Mixed Development Project will importantly contribute to the economic development of the country.”
The project is described as a “pioneer concept for urban renewal enabling the Urban Development Authority to acquire private lands in under developed/underserved areas of Colombo City and provide a better housing/commercial area with amenities to the habitants on a part of the said area.
“This approach ensures the habitants continue to enjoy the locational advantages and to improve their quality of life and living standards through the construction of residential and commercial buildings including luxury apartments and commercial spaces, create avenues for the development of a world class project that will transform the urban landscape and uplift the profile of the entire area.”
The tax concessions will include ten years exemptions from Corporate Income Tax as well as Withholding Tax on interest on foreign loans taken for capital expenditure and on technical fees paid to consultants, on management fees and royalty payments, provided however that total of such charges does not exceed three per centum (3%) of the gross operating revenue, on marketing fees, provided however the total of such fees does not exceed one point five per centum (1.5%) of the gross operating revenue, and on incentive management fees, provided however the total of such fees does not exceed ten per centum of gross operating revenue.
The expatriate staff of the project company shall be exempted from payment of Pay As You Earn Tax (PAYE) for five years subject to a restriction that this concession shall apply to a maximum number of 15 employees The company is required to gradually replace expatriate staff with local staff, on a best-efforts basis.
All imports of project related goods and local purchases of project related goods or services required for the implementation of the project as approved by the Board of Investment will be exempted from the Payment of Value Added Tax (VAT), during the project implementation period of eight years and any contractor or a sub-contractor who supplies to such contractor, to the project, will be entitled to the deferment as permitted in the VAT Act.
The company shall be exempted from the payment and charge of Ports and Airports Development Levy (PAL), on the project related goods as approved by the BOI, the Construction Industry Guarantee Fund Levy, and Customs Duty on Importation of project-related items.