In a major investment drive, the government is considering bringing back tax holidays — this time two years instead of the previous five — for locals and foreigners who bring in investment projects in excess of US$ 50 million (Rs. 16 billion) along with duty-free vehicles.
The proposals are expected to be part of the 2024 budget currently under discussion. Investors, local or foreign, who bring in such investments will be entitled to import duty-free vehicles of their choice, a senior Treasury official told the Sunday Times.
However, only one duty-free vehicle would be allowed for one investment project, the official added.
Another budget 2024 proposal aims to attract 100 IT companies to be set up in Sri Lanka. These, too, will be given the opportunity to import duty-free vehicles, although the Treasury has stressed that only electric vehicles will be permitted under the scheme.
Both investors and the IT companies will also be given a two-year income tax holiday. While the government previously gave five-year tax holidays to some investors, the official said this had been reduced to a maximum of two years at the insistence of the International Monetary Fund (IMF).
Investment Promotion State Minister Dilum Amunugama, too, confirmed that proposals to provide duty-free vehicles and tax concessions for large-scale investors had been forwarded to the Finance Ministry. “We expect the Treasury will respond positively to these proposals,” the minister said.
The government is also aiming to set up new Board of Investment (BoI) zones through the 2024 budget, Minister Amunugama disclosed. He said sites had been identified for several of the BoI zones. A new BoI zone is expected to be established on the land that previously housed the Voice of America (VoA) relay station at Iranawila. Other places that have been earmarked for BoI zones are Bingiriya, Paranthan, Mankulam and Kankesanthurai.
The government’s target this year is to attract USD 1 billion in foreign investment. State Minister Amunugama claimed about USD 700 million in foreign investment had already come into the country. Negotiations for projects totalling a further USD 400 million are currently ongoing. Separately, discussions are also underway towards signing an agreement to open a USD 1.6 billion oil refinery in Hambantota, Amunugama said.