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DAIRY & LIVESTOCK DEVELOPMENT
A new enterprise which is engaged in the manufacture
of je ellery, cutting and polishing of ge s with a minimum investment
of at least Rs 10 million and exporting n t less than 70% of output
would be entitled to a 20 year tax holiday. Existing BOI/non-BOI
companies investing an additional sum of R 5 million and exporting
not less th n 70% of output too will be granted a total of 20
years tax holiday.
new company engaged in the tr ding of gems, diamonds and gold
will be granted a 20 year tax holiday, pr vided such enterprise
receives at le st 90% of its income in foreign currency.
all precious metals an gems (including diamonds) have been exempt
from the application of duty, VAT under the "normal laws".
These policies have been framed with the obective of making Sri
Lanka a centre for manufacturing, trading and retailing in gems,
precious metals and jewellery.
Companies involved in the cultivation and/or
processing of non plantation agricultural produce (excluding planting
and primary processing of tea, rubber and coconut), research on
high quality seeds and seed production, cultivation under poly-tunnels
and drip tunnels using advanced technology, development of marketing
infrastructure such as storage facilities for agricultural produce
and dairy and livestock development would be entitled to generous
tax holidays and other concessions.
company engaged in the above activities and investing a minimum
Rs 10 mn and employing 20 persons shall be entitled to a 10 year
tax holiday. Note that in the case of agriculture, the minimum
area under cultivation should be 5 hectares. If the total investment
is between Rs 2.5 mn and Rs 10 mn the tax holiday period is 5
years. In addition, companies which qualify for tax holidays as
mentioned above would be entitled to import all project related
imports duty free. For companies exporting less than 50% the duty
exemption on plant, machinery and other project related equipment
shall apply during the project establishment period. Export oriented
companies would enjoy duty exemption on raw material imported
for the purpose of export processing.
items required for agricultural activity have been exempt from
duty under the Customs Ordinance and are thus available to companies
regardless of export orientation. These include seeds, green houses,
poly-tunnels, drip irrigation systems, selected agricultural machinery
etc. (click here for more
Any new enterprise engaged solely in the export
of locally manufactured products, will be eligible for concessionary
tax at 150/o per annum for a period of 20 years, provided the
annual purchase of locally manufactured products for export is
not less than US $ 20 million and the annual inward remittances
to meet local expenses of the enterprise shall not be less than
Rs. 15 million.
company shall also be entitled to exemption from exchange control
and duty on capital goods and raw materials.
A company setting up its Regional Operating
Headquarters (ROHQ) in Sri Lanka for the purpose of managing the
business of two or more of its associates/related companies established
offshore, would be entitled to a 5 year tax holiday subject to
the ROHQ providing such companies with two or more of the following
services, and receiving 900/0 of its income in foreign currency:
o administration, business planning and co-ordination
sourcing of raw materials and components
research and development services
technical support services
financial and treasury management
marketing and sales promotion
meeting the above criteria will be eligible for a five year tax
holiday and the right to operate Foreign Currency Banking Unit
OF EXISTING ENTERPRISES IN 'DIFFICULT'
AND 'MOST DIFFICULT' AREAS
BOI companies presently engaged in the manufacture and export
of apparel and textile products already located in "difficult"
or "most difficult" areas as classified by the BOI
shall be entitled to an additional tax holiday period of five
years provided they either set up a new expansion unit in the
same locality before 3 1.12.1999, for the manufacture of garment
ancillary products, or invest a mirnmum of Rs 10 million in
centre for advanced technology. The manufacturing unit should
provide additional employment for a minimum of 100 persons and
export at least 50% of its output
whilst the specialist training centre should have a capacity to
train not less than 100 persons at any given time.
non BOI enterprises already established outside the district of
Colombo too would be eligible for this tax holiday provided they
set up a new company to manufacture any item other than apparel,
employ 75 persons and export a minimum of 250/0 of its output.
These new units too should be set up outside the Colombo District
of more than Rs 10 million in hotels, recreational complexes,
golf courses and other projects related to tourism and leisure
attract a tax rate of 15 per cent for 15 years. During the implementation
(construction) period, such projects may also import equipment
and construction materials free of import duty.
in this category may also obtain foreign loans to meet cost of
imports with the prior approval of the Controller of Exchange.
Note that tourism, recreation and leisure projects that exceed
Rs 500 million (US$ 8.0 inn) qualify for incentives under Large-Scale
A new company undertaking the construction of
at least 100 housing units in not more than 3 locations with an
investment of Rs. 50 million would be entitled to an income tax
holiday of 7 years.
the event the investment is Rs. 100 million or more, such companies
will be eligible for a 10 year tax holiday. The above companies
would also be entitled to customs duty exemption on project
related items during the implementation (construction) period
of the project.
SCALE INFRASTRUCTURE PROJECTS
New companies constructing and operating hospitals
on a two tier basis (both paying and non-paying sections) either
within or outside the district of Colombo would be entitled to
a tax holiday period of 10 years and duty free import of project
related items during the implementation period. Hospitals established
within the Colombo District should have a minimum investment of
Rs. 75 million whilst those set up outside the district of Colombo
should invest a minimum of Rs. 50 million. The non-paying sections
should consist of an outpatient department (OPD) and a ward with
a minimum of 25 beds.
above projects would also be entitled to import specific project
related items free of customs duty during the project construction
period and as detailed in the customs exemption list thereafter
(see page 39 for details).
category of investment includes warehouses, environmental improvement,
power generation and industrial estates.
qualify for incentives, the minimum project size is Rs 50 million
(US$ 805,000) for power projects and Rs 125 million (US$ 2.0 million)
for other activities.
A concessionary tax rate 15 per cent is offered as follows:
tax of 15%
(Number of years)
For power projects, mm. investment is Rs5Omn
Projects above Rs. 500 million qua 47ji for incentives under Large
benefits include exemption from import duties on capital goods,
construction machinery, equipment and construction materials during
the project establishment period.
ENTERPRISES UNDERTAKING LARGE SCALE INVESTMENTS
Existing enterprises engaged in the manufacture
of cement, steel, textile or textile processing, including yarn,
thread or any other industry as may be determined by the Ministry
of Finance shall also be entitled to incentives subject to their
undertaking an additional investment of not less than Rs. 500
inn. as applicable to large scale projects. The income tax holiday
would be applicable to the company's entire income from the date
on which the enterprise makes its first commercial export or production
after the expansion programme. In addition they would be entitled
to import duty free all project related materials required for
Tax concessions are available to institutions
providing training facilities to approved sectors. These include
information technology, technical training, management and textile
technology. Other sectors may be approved by the BOI, depending
on their contribution to the national economy.
providing training are eligible for a preferential tax rate of
15 per cent for 10 years. They are exempt from import duty on
the import of machinery and other inputs during the project establishment
period. In order to further stimulate the private sector investor
engagement in the provision of training facilities in priority
sectors such a~s garments, gems and jewellery, electronics, computer
software, a 5 year tax holiday will be granted provided each training
institute undertakes training for a minimum of 300 persons.
ensure that human resources are developed further incentives are
granted in the area of training of software specialists by granting
a 5 year tax holiday for operation of software training institutes
which have a minimum of Rs. 15 million with the facilities to
train a minimum of 300 persons per year.
Any new company providing transport services
to workers to and from Export Processing Zones or Industrial Parks
shall be granted a 5 year income tax holiday, provided such an
enterprise engage new buses with a total seating capacity for
not less than 400 persons.
existing enterprise which has entered into an agreement with the
BOI and enjoying an unexpired tax exemption period would be granted
an additional tax holiday for a specified period as indicated
in column 1 below, provided that such enterprise provide transport
facilities to workers from a date not later than December 31st
1999 satisfying the following criteria for a continuous period
of not less than 05 years.
Period of exemtion
Minimum seating capacity
Min. No. of employees of the factory
All enterprises which have entered into an Agreement
under Section 17 of the BOI Act after November 1993 and have created
an additional 100 permanent jobs after November 8, 1995 will be
eligible to import a passenger vehicle free of import duty up
to a value of US$35,000. A special application has to be submitted
for the purpose. Depending on project requirements, the BOI may
also consider approving the duty-free import of off-road vehicles
on an individual basis.
project-related vehicles such as ambulances (for hospitals) and
freezer trucks (for food processing operations) are approved for
duty-free importation automatically.
Projects eligible for concessions in this sector
are decided on a case-by-case basis by the Board in consultation
with the Ministry of Industrial Development and within the framework
of regulations published under the BOI Law, Mines and Minerals
Act and other related statutes.
Board of Investment (BOI) , Sri Lanka
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