The Government is now offering massive generous tax concessions and incentives to attract foreign investment.
This was made possible following the reactivation of the Strategic Development Projects Act (SDPA) of 2008 which was put on hold for three years by the previous regime, Inland Revenue Department sources said.
Sri Lanka continues to experience low levels of foreign direct investment (FDI). According to Central Bank Governor Prof. W.D. Lakshman, Sri Lanka’s FDI is still around US$1 billion to $2 billion since the end of northeast conflict.
Strategic development projects are to be given tax exemptions up to 25 years under the SDPA; a senior Finance Ministry official said adding that the government anticipates this would help FDI inflows.
Foreign investors will be excluded from the payment of the VAT under the SDPA.
This Act was introduced by the previous Rajapaksa regime in February 2008 and it was amended twice in 2011 and 2013 to widen its concessions.
The UNF government has not made use of SPDA fully and it was confined to limited use administratively without repealing the Act while failing to introduce a new investment law.
The cabinet paper devised to reactivate this Act blamed the previous UNF government for “restricting the usage of the SDPA which has resulted in the hampering of international investor sentiment in Sri Lanka.