Large scale export-oriented companies exempt from PAL
View(s):Large scale export-oriented manufacturing companies with an investment of over US$200 million are to be exempted from paying Ports and Airports Development levy (PAL) for capital goods imported by those firms.
A decision has been taken to incorporate the PAL Act into schedule B of the Board of Investment law to facilitate granting exemptions from PAL towards this end subject to the clearance of the Finance Ministry, official sources revealed.
The aim is to attract Foreign Direct Investment companies that have shown the potential of investing in high tech industries in host countries and transfer new technology by attracting technologically advanced industries.
It will also eliminate indirect cost on export products and improve competitiveness, a senior official of the Finance Ministry told the Business Times.
Tax incentives could play an important role in attracting export-oriented (efficiency-seeking) FDI, especially where other competing countries still offer them with concessions, provided other preconditions are ‘reasonably’ met, he said adding that removing all tax incentives, in investment and trade may be counterproductive.
According to the Schedule B of the BOI law “The Board shall have the power to enter into agreements with any enterprise in or outside the Area of Authority and to grant exemptions from any law referred to in Schedule B hereto, or to modify or vary the application of any such laws, to such enterprises in accordance with such regulations as may be made by the Minister.”
The laws referred to in the Schedule B of the BOI Law are the Inland Revenue Act No.4 of 1963; the Inland Revenue Act (No. 28 of 1979), the Inland Revenue Act (No. 38 of 2000), the Customs Ordinance, the Exchange Control Act, the Companies Act, the Merchant Shipping Act, the Finance Act and the Air Navigation Act.
The government plans to establish 45 economic zones countrywide to promote export-oriented manufacturing to create one million employment opportunities for the youth. The exemption of PAL is one of the initiatives introduced to make this plan a reality, a senior Finance Ministry official said.
(Bandula)