Though Sri Lanka lowered its Port City Colombo corporate income tax holidays from 25 years to 15 years, only 13 of 245 investor inquiries have declined the taxation adjustment, Deputy Minister of Industry and Entrepreneurship Development Chathura Abeysinghe said in parliament yesterday (19).

“Six months ago, the opposition started saying that when we change the tax benefits for the Port City, investments will not come. But I can tell you that it has not been the case. Out of the 245 inquiries, only 13 inquiries have declined the new tax structure,” Abeysinghe said.

In January, Sri Lanka’s Parliament passed amendments to the Colombo Port City Act, bringing down the initially proposed 25 years of corporate tax-free incentives to 15 years, citing the lack of “pre-set criteria” determining the reason for such allocations. With the amendments, the 15 year incentives are to be granted to billion dollar investments, with smaller investments granted shorter time periods for the tax holiday. 

According to the Act, in Category ‘A’, businesses that are to be prioritised for the 15 period include those with investments worth 1 billion dollars or upwards, with “strategic importance”. Category ‘B’ includes businesses with $ 500 million investments, Category ‘C’ $ 100 million and ‘D’ $ 25 million.

So far, according to the Minister, the Port City has seen an indicated estimate of investments ranging around $ 4.6 billion. “In the Port City, the inquiries are now amounting to $ 4.6 billion. Even with all this cry, there are investors who are looking at Sri Lanka in a very positive way,” Abeysinghe said.

He clarified that in investments that have been made so far, $ 1.4 billion in primary investments have been made, and $ 600 million has been made in secondary investments, 

“From the primary investments, there is about $ 1.4 billion and in secondary investments there is about $ 600 million that has been attracted to Port City.”  

Under the amendments, the personal income tax exemptions for senior employees, that had previously been proposed for Port City with an indefinite time period, are set to phase out within a three-year time period. Other notable amendments include the limiting of income tax exemptions for new entrant authorised persons and employees.