Scroll to explore

Investment Incentives

The Inland Revenue Act No. 24 of 2017 provides an Incentive Regime granting reduced tax rates (for specific sectors) and Enhanced Capital Allowances based on capital investments made by the investors, effective from 1st April 2018.

1.1 Reduced Tax Rates  

  1. 1.Standard rate remains at 28%
  2. 2.Concessionary rate of 14% for;
      • Small and Medium Enterprises,
      • A company predominantly*  conducting/providing;
        • a business of exporting goods and services 
        • an agricultural business 
        • providing educational services 
        • undertaking for the promotion of tourism
        • providing information technology services
  1. 3.Higher rate of 40% for Betting & Gaming and Liquor & Tobacco

 

1.2 Enhanced Capital Allowance (ECA)

  • Enhanced Capital Allowance (ECA) is offered in addition to normal depreciation allowance.

 

Summary of the Investment Incentives

 

Location Expenses incurred on Depreciable Assets* Enhanced Capital Allowance Extended Period for Deducting Unrelieved Losses Exemption from Dividends tax & Exemption of employment income from WHT
Northern Province > US$ 3 Mn and < = US$ 1,000 Mn 200% 10 X
>  US$ 1000 Mn 200% 25
Other than Northern Province > US$ 3 Mn and < = US$ 100 Mn 100% 10 X
> US$ 100 Mn and < = US$ 1,000 Mn 150% 10 X
>  US$ 1000 Mn 150% 25
Category Expenses incurred on Assets or Shares Enhanced Capital Allowance Extended Period for Deducting Unrelieved Losses Exemption from Dividends tax & Exemption of employment income from WHT
State owned company > US$ 250 Mn 150% 25

1.3 Temporary Concessions

  • Temporary Enhanced capital allowance
Location Expenses incurred on Depreciable Assets* Enhanced Capital Allowance Period

(after commencement of the Act)

Northern Province Up to US$ 3 Mn 200% 3 years
Other than Northern Province Up to US$ 3 Mn 100% 3 years

 

  • Other Temporary Concessions

 

Sector Incentives Period

(after commencement of the Act)

Business of Life Insurance Reduced CIT rate of  14% 3 years
Information Technology

  • conducts a business which predominately consists of providing information technology services
  • has at least 50 employees during the whole of the year**
  • report those employees in the statement that the company, as a withholding agent, is required to file under section 86
Additional deduction equal to 35%

(of the total amount deducted for the year under the IR Act that represents payments made by the company which are to be included in calculating the taxable income of its employees)

* Not entitled for enhanced capital allowance

ceiling of

5 years

Headquarters Relocation

(established on or after October 1, 2017)

CIT Rate  at 0% 3 years
Renewable Energy

(Which entered into a Standardized Power Purchase Agreement on or before November 10, 2016 with the Ceylon Electricity Board )

Reduced CIT rate of  14% 3 years
Research and Development Additional deduction equal to

100% of the total amount of research and development expenses

3 years

** By the Budget 2019, it has been proposed to remove such condition for claiming the concession.

1.4 Duty Exemptions on Importation of Project Related Capital Goods

  • Exemption on Custom Duty
  • Custom Duty Exemption on imports of project related capital goods (plant, machinery and equipment).

  • Exemption on Ports & Airport Development Levy
  • •Large scale export-oriented manufacturing companies with an investment of over USD 200 million, which has entered into an agreement on or after November 1, 2016, with the Board of Investment of Sri Lanka will be exempted from paying Ports and Airports Development levy (PAL) for importation of project related capital goods during the project implementation period.

    • PAL Exemption for selected Machinery & Appliances.

1.5 Duty Exemptions on Importation of Raw Materials

Custom Duty, VAT, PAL, and NBT are exempted for importation of raw materials for export oriented projects.

NON-FISCAL INCENTIVES

  • Foreign Equity
  • 100% foreign ownership permissible except for Pawn broking, Retail trade (where a capital
    contributed by a person resident outside Sri Lanka) with a capital of less than five million USD and Coastal fishing.

  • Repatriation of Earnings
  • All income, proceeds on sale of the investments can be repatriated through an Inward
    Investment Account opened by the Investor

Free Download WordPress Themes
Free Download WordPress Themes
Download Premium WordPress Themes Free
Download Best WordPress Themes Free Download
free online course
download mobile firmware
Download WordPress Themes Free
download udemy paid course for free