Sri Lanka offers a range of competitive incentives to attract foreign investments, supported by Investment Protection Agreements, Double Taxation Relief Agreements, and Free Trade Agreements with countries like India and Pakistan.
Key Incentives for Foreign Investors:
1. Board of Investment (BOI) Registration
Foreign investors can register with the BOI under Section 17 of the BOI Law No. 4 of 1978 to access incentives based on:
•Investment scale (small, medium, or large-scale).
•Project expansion.
•Strategic import replacement projects (e.g., fabric, pharmaceuticals, milk powder, cement).
2. Tax and Duty Exemptions
Incentives vary by sector (manufacturing, agriculture, services) and may include:
•Tax holidays.
•Duty-free imports for capital goods and raw materials (for export-oriented services).
•Exemptions from VAT, Customs Duty, and Port and Airport Development Levy (PAL).
•Exemptions from Exchange Control restrictions.
3. Strategic Development Projects (SDP)
Investments classified as Strategic Development Projects under the Strategic Development Projects Act No. 14 of 2008 (as amended) may receive:
•Full or partial exemptions from Income Tax, VAT, and other levies for up to 25 years.
4. Special Concessions for Specific Activities
Enterprises involved in the following activities, per agreements with the BOI, benefit from significant tax exemptions under the Finance Act of 2013:
•Entrepôt trade (import, minor processing, and re-export).
•Offshore business.
•Front-end services for clients abroad.
•Headquarters operations for financial supply chain and billing management.
•Logistics services (e.g., bonded warehouses, multi-country consolidation operations).
5. Sector-Specific Restrictions
Some sectors are closed to foreign investment or require government approval. Investors should consult the BOI website to confirm if their business activity is eligible.
Why Invest in Sri Lanka?
With its strategic location, robust legal protections, and targeted incentives, Sri Lanka provides an attractive environment for foreign investors. For more details, visit the BOI – Invest in Sri Lanka website.
