Business Times

New law to replace BOI Act

By Bandula Sirimanna

A new Act is to replace the Board of Investment (BOI) Act where a new investment promotion agency will be created rationalising Sri Lanka’s investment incentive regime. The amendment bill is to be referred to the Department of legal Draftsman shortly, a senior official of the Finance Ministry told the Business Times which in recent weeks exlusively reported on the decision to create a new agency to replace the BOI which is seen as inadequate to meet the investment challenges of post-war Sri Lanka.

A new strategy has been formulated in which investment is targeted to raise from the current level of 25 % of GDP to 33 - 35 % (of GDP). A 10 % increase in investment is required over the next few years for this purpose, he said.

“That means doubling the current level of investment and such inflows will support Sri Lanka's growth prospects. This task will be vested in the proposed investment promotion agency,” he revealed, adding that the name of the new agency is yet to be finalised.

He said the BOI Act currently supersedes the IRD Act when it comes to tax treatment of BOI companies. BOI tax holiday companies are not exempt from having to submit tax returns, but this requirement has not been fully enforced. To tackle these issues, a proposal has been made to bring all tax incentives under the purview of the IRD. The IRD will set up a joint committee with the proposed investment promotion agency to review tax concessions being granted to prospective investors, he said.

It has been estimated that while FDI flows to the Sri Lankan economy amounts to just 1.5% of GDP, revenue losses due to BOI tax exemptions cost as much as 1% of GDP. “So, while it certainly has promoted greater investment and more export-orientation, the BOI tax incentive regime has resulted in an erosion of tax revenue as it has granted, and continues to grant, broad tax incentives,” he added.

Although attempts were made in 1994 and 2001 to streamline the incentive regime and bring it all under the purview of the IRD subsequent policy reversals saw a continuation of broad tax holidays and exemptions being granted under the BOI law. This law will be amended to streamline the incentive regime as well as to avoid complexity, lack of transparency and the erosion of the tax base, he added.

The Government is also planning to introduce a regime of lower, overall corporate tax rates in order to reduce the number of tax exemptions, tax holidays and concessionary tax rates given to foreign investors. Incentives will be granted according to the amount of foreign capital brought in and also the size of the investment so as to encourage only the right type of capital, under the new set up, he said.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
New law to replace BOI Act
Value is key for SL over others: Taj Hotels MD
CB to relax exchange control rules
Top securities regulator visits Colombo
Budget: Growth with equality-urges Colombo business leader
Sri Lanka to consider reptile exports to Germany
Comment -Budget: Onus on taxes
Feature - Friday Forum outlines the path to national unity and reconciliation
Tourism strategies at provincial level
CPM annual conference slated for October 11
Gotabaya outlines war-winning strategy now applicable for economic war
250,000 computers dumped in Sri Lanka every year
India setting up 1,500 universities, China creates one every week
Design for economic growth
Leo Burnett’s Ranil wins a Global Medal of Merit from IAA
Lankaputhra Bank’s non-performing loans increase
Saberion offers alternative to commission based bookings
Janashakthi introduces Sri Lanka’s first 24-hour vehicle breakdown policy
Phoenix Jt. MD at O&M New York
Add 1% for North / East development in 2011 budget: Business leader
US Business Leaders meet President in NY
Central Bank $1 bln bond offer exceeds $6 bln in 14 hours
SLT's IPTV investment and ADSL services
Sri Lanka to use nuclear energy for commercial purposes
Agni Capital leads in driving foreign investments to SL
Fitch revises SLT outlook
Dedicated IPR UNIT of CID soon
Central Bank directs The Finance Company to seek new investors
Government introduces new procurement procedure for state institutions
Plenty Foods wins silver award at Farmer awards event
Ceylinco Life to present Rs 8.4 mln in new scholarships at 10th Pranama event
Sri Lanka's first 3D mobile game 'Colombo Ride 3D' opens in Oct.
Costs from interest free credit cards offers come from merchant’s commissions
Shortage of shares in Colombo market prompts SEC action
Microsoft EDI system for Brandix and Marks & Spencer
Eagle Logistics turns five
Dilmah founder felicitated as 2010 Brand Icon
Mandatory deposit insurance, drop in performing loan loss provisions by CB
Multi Finance to list on the Colombo Stock Exchange
Stepping up on Corporate Governance practices key to investment
SEC in a move to bring commodity exchange, exchange traded funds, unit trusts in 2010
CSE boom hasn’t reached remote areas; banks still rule
SEC prepares takeovers-mergers law
SEC wants to harmonise regulation with the region
SEC, CB rules bring in new business for banks
Hayleys and employees donate IT Centres to Northern schools
SMB Leasing to raise Rs 581 million from rights issue
NDB Bank launches an island-wide Savings Drive


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution