Strategic Development Projects get new structure for tax holidays

Tuesday, 17 February 2026 03:23 - - {{hitsCtrl.values.hits}}

Infrastructure, services, utilities and tourism excluding casinos and betting to get 6 to 10-year tax holidays based on investment tier
Manufacturing projects must invest over $ 50 m and create 250 jobs
Agriculture, education, tech and ICT require over $ 50 m and 50 jobs
Import exemptions during implementation; motor vehicles excluded

The Government has issued fresh regulations defining eligibility criteria and tax concessions for projects seeking classification as Strategic Development Projects (SDPs) under the Strategic Development Projects Act, No. 14 of 2008.

The regulations, published in Gazette Extraordinary No. 2474/66 dated 8 February 2026, were promulgated by President and Finance, Planning and Economic Development Minister Anura Kumara Dissanayake under powers vested in him by Section 4F read with Section 3 of the Act.

The updated schedule introduces a tiered framework based on sector, investment value, and minimum local employment generation.

Under Category A, covering infrastructure, services, and utilities, and tourism and leisure, excluding casinos, betting, and gaming, projects investing more than $ 50 million but less than $ 150 million and generating at least 100 local jobs will qualify for a six-year corporate income tax holiday. Projects investing more than $ 150 million but less than $ 300 million with the same employment threshold will qualify for an eight-year tax holiday, while investments exceeding $ 300 million will be eligible for a 10-year exemption.

Category B covers manufacturing projects. Investments exceeding $ 50 million but less than $ 100 million, with a minimum of 250 local jobs, will qualify for a five-year tax holiday. Projects investing more than $ 100 million but less than $ 150 million will receive an eight-year exemption, while those exceeding $ 150 million will qualify for a 10-year concession.

Category C includes agriculture, educational, technological establishments, and ICT. Projects investing more than $ 50 million but less than $ 100 million and creating at least 50 local jobs will qualify for a five-year tax holiday. Investments exceeding $ 100 million but less than $ 150 million will receive an eight-year exemption, while projects above $ 150 million will be eligible for a 10-year concession.

In addition to corporate income tax exemptions, approved SDPs will benefit from exemptions on Customs Import Duty, Value Added Tax (VAT), Ports and Airports Development Levy (PAL), and CESS during the project implementation period for the importation of capital goods and construction materials. Motor vehicles intended for travel or personal use are expressly excluded.

Corporate income tax exemptions will apply to all gains and profits of an SDP as defined under the Inland Revenue Act, No. 24 of 2017, and will take effect from the commencement of commercial operations as certified by the Board of Investment. Upon expiry of the concession period, projects will be subject to prevailing tax laws.