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Strategic development projects: COPF blocks SDP tax incentive gazette ...
Committee cites inconsistencies, outdated job metrics, investor uncertainty The Committee on Public Finance (COPF) has withheld approval for a key gazette notification aimed at regulating tax incentives under the Strategic Development Projects (SDP) Act, citing significant structural concerns.The decision had been taken during a high-level hearing on Tuesday (31 March), where COPF Chairman Dr. Harsha de Silva had described the proposed regulations as a terrible miscalculation that could hinder high-tech sector growth and create an artificial bias against manufacturing.The discussion had centred on Gazette Notification No.2472/66, dated 8 February, presented by the Department of Fiscal Policy. The gazette marks the first attempt to introduce a rules-based framework for granting tax incentives to large-scale investments following the 2025 amendments to the SDP Act.Previously, the Minister of Finance exercised discretionary authority over such incentives. The revised framework was intended to enhance transparency and predictability for investors. However, the COPF found that the proposed criteria itself were fundamentally flawed.A key point of contention had been the disparity in tax holidays across sectors. Under the proposed structure, Category A (Tourism and Leisure) investments between $ 50 million and $ 150 million qualify for a six-year Corporate Income Tax (CIT) holiday, while Category B (Manufacturing) investments between $ 50 million and $ 100 million receive only a five-year holiday.“If I bring $ 60 million for tourism, I get six years; if I bring $ 60 million for manufacturing, I get five years,” de Silva had noted, questioning the rationale behind favouring tourism over manufacturing, particularly when the country aimed to build a manufacturing-led economy.Ministry officials had defended the classification, saying that it was based on historical investment patterns with the Board of Investment (BOI), but were reportedly unable to provide a clear strategic justification for the disparity.The committee had also raised concerns over minimum local employment requirements tied to eligibility. Under the gazette, manufacturing projects must generate at least 250 jobs, compared to 100 for tourism and 50 for technology or agriculture.De Silva had described these benchmarks as arcane and misaligned with global economic trends, noting that high-value industries such as semiconductors, robotics, and advanced manufacturing were increasingly automated and relie...
Non-Resident Income Tax Rules - 2025/26 (Sri Lanka)
No Tax on Foreign Income Under Sri Lankan tax laws for the 2025/26 assessment year (April 1, 2025 to March 31, 2026): If you are classified as a non-resident by spending 183 days or more outside Sri Lanka within the year, you are not required to declare or pay tax on income earned from abroad. Foreign income will be completely tax-exempt for non-residents.
Central Bank of Sri Lanka
Statistics Department - Central Bank of Sri Lanka (Contact Tel : 0112477650)
KPMG Experts Discuss SVAT Abolition and Sri Lanka's Tax Transition
Sri Lanka is abolishing the Simplified Value Added Tax scheme effective 1 October 2025, replacing it with a risk-based VAT refund mechanism under the Value Added Tax Act KPMG experts warn that the new refund-based VAT system could severely impact businesses and the economy if not implemented efficiently, despite representing modernization of the VAT regime Under the new system, exporters with ...
