Chinese company to build and operate 4-lane New Kelani Bridge to Athurugiriya elevated highway
The government of Sri Lanka has reportedly granted several tax concessions to China Harbour Engineering Company Ltd. (CHEC) for the project to construct and operate a four-lane elevated highway from New Kelani Bridge to Athurugiriya via Rajagiriya.
The gazette by Sri Lanka’s Prime Minister Mahinda Rajapaksa has published the tax concessions under the Strategic Development Project Act.
The project is to be implemented with 100% foreign funding under Design-Build Finance-Operate-Maintain and Transfer (DBFOMT) basis with an envisaged investment is US$ 821.6 million.
The project construction is to take three years from the effective date of the related Concession Agreement and the project operational and maintenance period is 15 years, altogether 18 years, at the end of which the project company will hand over the project to Sri Lanka’s Ministry of Highways.
CHEC is also the contractor that will carry out engineering, procurement and construction of the project. According to local media reports, the project is one of the largest foreign investments in the road sector with a committed investment of US$ 821.6 million and is expected to be financed, with an equity contribution of US$ 246.5 million, and a loan of US$ 575.1 million, to be made during the construction period of the project.
The tax concessions will include exemptions from Corporate Income Tax for profit and income generated by the project under the Inland Revenue Act during the construction and operational and maintenance period.
Tax on dividends for the shareholders of the project company in relation to the distribution of dividend income will be exempted during the operational and maintenance period of 15 years and one year thereafter.
The project company will also be exempted from the payment of Withholding Tax (WHT) in relation to several areas.
OSL take:
China is one of Sri Lanka’s key development partners and the engagement of Chinese companies in the island’s development programme is indicative of the growing business/investment opportunities in Sri Lanka. While there is an expansion in business/investment opportunities in key economic sectors in the country, Sri Lanka’s development programme has presented many business options. Sri Lanka’s geographical positioning in the Indian Ocean and the many trade agreements as well as concessions enjoyed by the country and the business conducive environment have further added to the island’s attraction as a growing business/investment opportunity. Chinese businesses/investors could confidently explore the growing opportunities in Sri Lanka while also looking at forming partnerships or joint ventures with local businesses.
| Article Code : | VBS/AT/20211025/Z_7 |