Move to draw more foreign investment

Govt. to withdraw 300% tax on leasing of land to foreigners; PR for foreign spouses of Lankans under consideration

In a major move to draw foreign i nve s t m e n t , the Government is to withdraw the 300 percent tax on foreigners leasing land in Sri Lanka and consider offering permanent residency to foreigners married to Sri Lankans.

“For this purpose the Government will move amendments to the Land (Restrictions on Alienation) Act,” Lands Ministry Secretary I. H. K. Mahanama told the Sunday Times.

He said the move was to encourage foreigners to invest more in Sri Lanka.

The amendment to withdraw the Land Lease Tax for foreigners will come into retrospective effect from January 1 this year, according to the Bill which has been gazetted this week.

Under the amendment, the provisions relating to the Land Lease Tax will not apply to a lease of any land to a foreigner.

It will also not apply to any company incorporated in Sri Lanka under the Companies Act, where any foreign

shareholding in such company, either direct or indirect, is fifty per cent or more or to a foreign company, under and indenture of lease executed on or after January 1 this year.

Finance Minister Ravi Karunanayake in the last Budget announced that the tax on land lease on foreigners would be removed. He said the Government would also withdraw the restrictions on ownership on identified investments -- restrictions imposed through the Land (Restrictions on Alienation) Act, and seen as an impediment for attracting investments.

In a related move the Ministry of Internal Affairs is working on a proposal to grant Permanent Residency to foreign spouses married to Sri Lankan nationals.

Internal Affairs Minister S.B.Nawinna told the Sunday Times the move was to encourage Sri Lankans married to foreigners to settle down in the country and thereby increase possible investments.

"We are discussing the proposal with the Foreign Ministry and the Finance Ministry before submitting it to the Cabinet," he said.

The Sunday Times learns that the proposal is set to come into effect within the next three months.

Finance Minister Karunanayaka during the last Budget said that to encourage foreign investment, he was proposing to issue resident visas for a fee of US$ 250,000 for a three-year period and US$ 5 million for a permanent residence visa for foreigners, with the approval of the Cabinet of Ministers.