News
Gov to continue with tax exemptions and incentives for Port City
View(s):By Damith Wickremasekera
The government will continue with tax exemptions and incentives granted under the Colombo Port City Economic Commission Act for foreign investors despite requests from the IMF to reduce the time period for such concessions from 25 years to 12 years.
The tax concessions and incentives which were granted by way of a gazette notification in August 2023 will lapse in August this year with a new gazette expected to be issued for the continuation with the same concessions shortly, Finance Ministry sources said.
The International Monetary Fund (IMF) has informed the government that such concessions for long periods of time would impact government revenue, but the government said it would continue with the concessions granted by the previous government.
“There are four companies that have started work in the Port City with investments totalling US$ 1.4 billion, and there are around 100 other investors who are waiting for approval to begin work there. We may reduce the period of concessions for new investors to around 12 years, but the ones already given will continue,” the source said.
The investment from companies awaiting approval will be around US$ 3 billion, he added.
Foreign Minister Vijitha Herath said that the Cabinet-appointed economic subcommittee discussed the matter recently and decided there could be no change to the 2023 gazette for those who have already begun work at Port City. “If we reduce the tax exemptions and incentives, there will be no new investors coming forward. We will make it clear to the IMF that these concessions are only for the Port City projects and not for other foreign investments,” he said.
Under the regulations cited as the Colombo Port City (Guidelines on the Grant of Exemptions or Incentives to Businesses of Strategic Importance), the concessions are granted for those who make an investment of a minimum of US$ 1 million per plot of land or a pro-rated investment in a subdivided plot of land according to the Colombo Port City (Development Control) Regulations; or makes an investment of a minimum of US$ 25 million in the plots of land for the marina or social infrastructure.
The incentives and exemptions are valid for a period of 25 years and include several taxes including corporate tax, income tax etc.
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