Colombo Port City, BOI tax exemptions reach Rs. 120.7 billion
The Morning: Sri Lanka’s tax expenditure for exemptions given through trade-related duties amounted to Rs. 120.7 billion in the first five months of the year, Finance Ministry data showed.
According to the tax expenditure statement on Board of Investment (BOI) companies and Port City, the total tax exemption given through Sri Lanka Customs amounted to Rs. 120.7 billion by the end of May.
The total tax expenditure on BOI companies through trade-related duties amounted to Rs. 120.5 billion in the first five months, where exemptions through Customs Import Duty (CID) and Surcharges were at Rs. 36 billion, and Ports and Airport Levy (PAL) was at Rs. 30.3 billion.
Social Security Contribution Levy (SSCL) exemption on BOI companies in the first five months amounted to Rs. 31.8 billion.
Moreover, the tax expenditure for Port City Companies amounted to Rs. 131.3 million in the first five months, where CID took the highest exemption value of Rs. 59.9 million.
Further, data showed that the total tax expenditure for Value Added Tax (VAT) exemptions given through the Inland Revenue Department (IRD) for BOI companies in the first quarter of 2025 amounted to Rs. 9.8 billion, and exemptions for Strategic Development Projects (SDP) amounted to Rs. 628 million.
The highest VAT exemption of Rs. 5.9 billion was given to manufacturing-related BOI companies, while services and utilities took the second place with VAT exemption amounting to Rs. 2.5 billion.
Total VAT exemption given for BOI and SDP projects in 2024 amounted to Rs. 38.5 billion.
Port City VAT exemption in the first quarter of 2025 amounted to Rs. 10 million and the value of Rs. 190.4 million in 2024.
OSL take:
Sri Lanka’s ongoing economic expansion and push by local authorities to attract more foreign businesses/investors to the country have opened up many lucrative business/investment opportunities in the country. Sri Lanka’s geographical positioning in the Indian Ocean, the many trade agreements as well as trade concessions enjoyed with many foreign countries and the increasing business conducive environment have all added to the country’s attraction as an emerging business destination. It is in such a backdrop that the Sri Lankan government has taken steps to present many incentives including tax concessions to foreign businesses/investors interested in doing business in Sri Lanka. The Finance Ministry’s statement on the amount that has been spent on tax exemptions is a clear indication of the benefits foreign businesses/investors would receive when doing business with Sri Lanka. With Sri Lanka on the path to becoming a hub in the South Asian region, foreign businesses/investors could confidently explore the country’s expanding development programmes and the increasing business/investment opportunities. They could also look at setting up bases in Sri Lanka to engage with other countries in the region using the preferential treatment enjoyed by Sri Lanka with them.
| Article Code : | VBS/AT/20250707/Z_1 |