Sweeping tax concessions for International Financial City Project

Sweeping tax concessions have been given to the International Financial City or Port City project to be built in a reclaimed sea area of 269 hectares.

The tax concessions have been announced by Development Strategies and International Trade Minister Malik Samarawickrema in a gazette notification issued this week under the Strat e g i c Development Projects Act.

The project work, to be undertaken in two phases, will include the construction of wave protection breakwater, land reclamation, ground improvement, and revetment, canals to connect seawater, artery roads, and utilities.

The total investment on the project is US$ 1,337 million with a Project implementation period of eight years, the date of which will be notified after the Third Supplementary Agreement is signed between the Board of Investment and the Chinese project company.

The tax concessions will include exemptions from Corporate Income Tax covering 25 years. The exemption period will start when the Project Company makes taxable profit or six years after the beginning of the construction of the project, whichever occurs earlier. However, it will exclude the period between March 6, 2015 and August 12, 2016, the date on which the Tripartite Agreement between the project company, the Government of Sri Lanka and the Urban Development Authority was signed.

Additionally dividends distributed to the shareholders out of the profit will be exempted from income tax during the 25 years.

There will also be an exemption on Withholding Tax on interest on foreign loans taken for capital expenditure and on technical fees paid to consultants; on management fees and royalty payments provided however the total of such charges does