Five ‘strategic development’ projects including Krrish to lose concessions
View(s):The Sri Lankan Government will not provide any tax concessions in the future under the controversial Strategic Development Project (SDP) Act with at least five ‘strategic’ projects including Krrish likely to lose this comfort status.
Board of Investment of Sri Lanka (BOI) officials said concessions under these regulations will be considered only under exceptional circumstances.
The five projects for which parliamentary approval for tax concessions is yet to be obtained are Krrish Transworks Colombo (Pvt) Ltd, Lanka Sugar Refinery Company (Pvt) Ltd, CHEC Port City Colombo (Pvt) Ltd, Avic International Holdings Lanka (Pvt) Ltd and Prosperity Place Lanka (Pvt) Ltd.
These projects were under consideration for granting special Strategic Development Project (SDP) status during the previous regime and had stagnated at the second level of a 5-step process of approval.BOI Chairman Upul Jayasuriya said the government has decided to discontinue the implementation of the Strategic Development Project Act while tax concessions will be granted for investment projects in accordance with the 2006 gazette notification with regulations which have far less concessions.
He said that the benefits already granted to projects under the Act will continue to be honoured.
Another senior official of the BOI told the Business Times the government was eager to review the prevailing laws affecting FDI including laws restricting foreign land ownership and the SDP.The procedure of granting SDP status had also been complicated, he said, adding that one of the reasons for the discontinuation of the Act was this complex procedure.
Outlining the procedure, he noted that this entailed identification of the project; publication of a gazette notice on identifying the project; informing the cabinet; obtaining cabinet approval for same; and publication of an order in the gazette specifying the exemptions granted and then placing it before parliament for approval by resolution of parliament. Krrish, CHEC Port City, Lanka Sugar and Avic International and Prosperity Place Lanka were at the stage of publication of a gazette notice of an order specifying concessions under the Act, he disclosed adding that these ‘strategic development’ deals will have to be re-negotiated to be eligible to the 2006 concessions.
Sri Lanka will not provide ad-hoc concessions for investors but will attract investments to specific sectors, within a broader industrial policy framework and vision. Very generous incentives, or very low taxes would not be able attract high levels of FDI, he disclosed. Under the SDP, 10 mega projects with an investment of US$5.98 billion were facilitated by the BOI under the previous regime.
The realised investment of these strategic investment projects was in the region of $896 million up to the third quarter of last year, a progress review report revealed.