- 2 Orders under the Strategic Development Projects Act before House today
- Sweeping tax concessions for Colombo International Financial Centre and Ceylon Tyre Manufacturing Company to be debated
By Chandani Kirinde
Parliament will take up for debate two Orders under the Strategic Development Projects Act in Parliament today. The debate will look into the viability of granting tax concessions to two investment projects – the Colombo International Financial Centre and Ceylon Tyre Manufacturing Company Ltd.
The Orders will be presented by Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance.
The Ceylon Tyre Manufacturing Company project, to manufacture semi-steel tyres and all steel radial tyres for the export market at Hambantota International Port, was identified as a Strategic Development Project and launched in January this year. It is to be completed within 36 months. It will produce truck and bus radial tyres and passenger car radial tyres for export.
Under the Strategic Development Projects Act Order, the project company will get tax concessions, including from Corporate Income Tax, Income Tax on Employment, Value Added Tax, Ports and Airport Development levies and Customs levies, during the project period.
The Corporate Income Tax concession will be granted for 12 years from the date of Cabinet approval. At the end of this period, the prevailing tax rate will be applicable in respect of the profits generated by the project for the project company.
Further, expatriate employees of the project company shall be exempted from income tax arising from gains and profits for a period of five years, subject to a maximum number of 15 expatriates.
The VAT exemption shall be deferred for the importation of raw materials subject to 80% of the output of the project company being exported, while the exemption from the payment and charge of Ports and Airports Development Levy will apply on all capital items imported during the project implementation period of 36 months, as well as raw materials as described and permitted under the Ports and Airports Development Levy Act.
The exemption on Customs duty will apply for the importation of all project-related items, including capital items, construction items, raw materials and consumables, as approved by the Board of Investment of Sri Lanka, excluding the items in the negative list published by the Ministry of Finance.
Parliament will also approve a wide range of tax concessions for the Colombo International Financial Centre Mixed Development Project at the Colombo Port City, for the construction of the first of five vertical iconic towers at Colombo Port City – the Cabinet approval for which was granted in October.
The conditional concessions include exemption from the Ports and Airports Development Levy Act, Customs duties, Value Added Tax (VAT) Act, and Corporate Income Tax for voting periods.
During the project implementation period, up to a maximum of 30 expatriate staff at any given time will be exempted from the applicable pay as you earn (PAYE) Tax/Personal Income Tax.
The project company shall be required to gradually replace expatriate staff with local employees on a best effort basis, with 75 % of the unskilled labour requirement to be sourced locally, 65% of the skilled labour requirement to be sourced locally, while 75% of the white-collar workers will also be sourced locally.