Sri Lanka announces tax exemptions for dedicated Pharmaceutical Manufacturing Zone
The government of Sri Lanka has reportedly announced numerous tax exemptions for the dedicated Pharmaceutical Manufacturing Zone being built on 400 acres of land in Sri Lanka’s southern district of Hambantota.
According to reports, the tax exemptions have been granted under the provisions of the Strategic Development Projects Act.
The dedicated Pharmaceutical Manufacturing Zone will be built in an area of 400 acres of land owned by Sri Lanka’s Board of Investment (BOI) in the Hambantota-Arabokka area in two stages of 200 acres each to facilitate investments made by foreign/local pharmaceutical manufacturers.
It has been identified as a project of national interest that is likely to bring economic and social benefits, and one which will also change the landscape of the country, according to the Daily FT.
The BOI will be the implementing agency under the supervision of the Ministry of Health and the State Ministry of Production, Supply and Regulation of Pharmaceuticals.
The tax concessions will apply to Corporate Income Tax, Income Tax on employees, Value Added Tax (VAT) and the Ports and Airports Development Levy, while the concerned enterprises will also be exempted from Customs Duty for import of capital and construction-related items, raw materials and production/process-related consumables other than those on the negative list issued by the Finance Ministry, the report further stated.
There will also be exemption from charges of CESS under the Sri Lanka Export Development Act for importation of capital and construction-related items, raw materials, and production/process-related consumables for both production for export and import substitution, the news report added.
The infrastructure requirement of the first phase of the zone is to be ready within 18 months and the tax exemptions are to apply to individual enterprises established within the zone, and be customised for each.
Individual enterprises will be eligible for selected incentives based on the above criteria.
The incentives are to be reviewed every five years with effect from the date of approval of Parliament for the zone and submitted to the Cabinet for its approval, followed by a fresh gazette notification granting incentives for each enterprise which will be decided by a committee comprising the Chairman and Director General of BOI , Secretary/nominee of Ministry of Health, Secretary/nominee of State Ministry of Production, Supply and Regulation of Pharmaceuticals, Chairman of State Pharmaceutical Corporation, Chairman of State Pharmaceutical Manufacturing Corporation, Chairman of National Medicines Regulatory Authority, Chairman of Export Development Board and Chairman of Central Environmental Authority, which will be stipulated in the individual agreement between the BOI and each enterprise.
The tax exemptions have been notified by Sri Lanka’s Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister by gazette notification.
OSL take:
The government of Sri Lanka is committed to increasing its pharmaceutical production line in a bid to reduce medical imports to the country as well as to enter in to the pharmaceutical exports market in the region. Sri Lankan authorities have therefore offered many incentives to potential investors in the pharmaceutical manufacturing sector. Potential investors could utilise the many incentives offered as well as the country’s trade deals with other countries. Foreign businesses/investors could therefore confidently explore business opportunities in Sri Lanka’s pharmaceutical manufacturing sector.
| Article Code : | VBS/AT/20210310/Z_3 |