Sweeping tax concessions for Tata to resume real-estate project

The Government has given the go-ahead for the Indian real estate giant Tata to carry out a re-development and mixed-development project on eight acres of land in Kompannveediya.

The Gazette notification to grant sweeping tax concessions to the project company One-Colombo Project (Pvt) Ltd was published this week.

The company will invest US$ 429.5 million (Rs. 64.4 billion) to construct a multi-storied building complex at the site.

The project was first approved in July 2014 under the previous regime but with the change of government in January 2015, the project was stalled, subject to review. The Cabinet in mid-2015 gave approval to review and resume the project under the Strategic Development Act.

This week, on behalf of Development Strategies Minister Malik Samarawickrama, Parliamentary Affairs and Media Minister Gayantha Karunathilake presented in Parliament the Gazette notification outlining the tax concessions.

It says the company will be granted income tax holiday for 10 years and other tax exemptions for six years.

“The company will also get exemptions from payment of Withholding Tax on interest on foreign loans taken for capital expenditure and on technical fees paid to consultants; management fees and royalty payments, provided, however, the total of such charges does not exceed three per cent of the gross operating revenue; marketing fees, provided, however, the total of such fees does not exceed 1.5 percent of the gross operating revenue as well as incentive management fees provided however the total of such fees does not exceed 10 percent of the gross operating profit," the Gazette notification says.

The company will also be exempted from the Ports and Airports Development Levy, Construction Industry Guarantee Fund Levy and import duties on project related items for eight years.