Port City gazette presented to Parliament

Tuesday, 31 January 2017 00:00 - - {{hitsCtrl.values.hits}}

Port City - Pic by Shehan Gunasekara

Gazette notifications giving sweeping tax concessions for the Port City and a mixed development project at Slave Island have been presented to Parliament by the Government. The Port City project, renamed the Colombo International Financial City (CIFC), was restarted by the Government after the signing of a fresh agreement in August. However, the initial exemptions proposed under the Strategic Development Project Act of 2008 under the administration of former President Mahinda Rajapaksa in 2014 expired before they could be presented to Parliament.

The $ 1.3 billion project, expected to be implemented over the next eight years, was adopted as a Strategic Development Project by the Cabinet on a proposal made by Development Strategies and International Trade Minister Malik Samarawickrama.

A new set of exemptions for the Port City was outlined in an Extraordinary Gazette Notification released on 19 September. Under the slew of exemptions, foreigners working for the Chinese company are exempted from Pay As You Earn (PAYE), ports and airport development levy, CESS, Nation Building Tax of 2% and Customs Duty. The new gazette was submitted to Parliament on Friday.

The provisions of the Inland Revenue Act, No. 10 of 2006 relating to the imposition of income tax on the Project Company on the profit and income generated from the activities from the said Project shall not apply for the period of twenty five (25) years (“Tax Exemption Period”), the gazette said.

“The said Tax Exemption Period shall commence from the year in which the Project Company makes taxable profit or six (06) years after commencement of construction of the project, whichever occurs earlier,” it added. The gazette is likely to be re-issued ahead of the Government presenting it before parliament for approval.

The project tripartite agreement was signed by the Megapolis and Western Development Ministry, Urban Development Authority and the China Harbour Engineering Company (CHEC). The Sri Lanka Ports Authority (SLPA), which was a party to the previous agreement made under former President Mahinda Rajapaksa’s Government was exempted from the new version as the Port City would now be part of the new Government’s larger Megapolis project.

The Tata mixed development project in Slave Island is also reported to have been given similar concessions.

CHEC, which is a subsidiary of the Chinese-State run China Communications and Construction Company (CCCC), has also carried out other large scale construction projects in Sri Lanka, including the Hambantota port and Sooriyawewa cricket stadium.