Sri Lanka’s investment promotion agency, Board of Investment (BOI) welcoming the 2021 budget presented by the Finance Minister and Prime Minister Mahinda Rajapaksa, said the agency will target strategic investments following the tremendous opportunities provided by the budget proposals.
The agency emphasized that the consistency in investment regime providing a 5-year window will boost investor confidence while strengthening certainty and predictability.
BOI trusts that incentives are part of the landscape of the investment strategy to attract sustainable investments as they are often a decisive factor in investment decision making. Combined with the more obvious hard infrastructure offerings, locational benefits, sound legal framework and access to talent pools, investment incentives are another important piece of the puzzle to attract investments, which could also open doors to other economic benefits including technology clusters, skills development and linkage to global value chains.
Incentives alone will not be a positive signal to attract investors unless there is an assurance of its consistency thus, BOI has been craving for a consistent investment policy environment for the promotion of identified thrust sectors. With the incentives offered to investors by this budget, along with the endorsement by the government for a consistent policy environment has fulfilled the aspirations of BOI as the national investment promotion agency.
Now BOI has much to play with, when it comes to enticing investors with discretionary dollars and much to gain by attracting topnotch investors to establish in the country which would provide anticipated economic and social benefits.
New openings for investments introduced in the budget 2021:
- Fully-fledged plug and play 05 Techno Parks in Galle, Kurunegala, Anuradhapura, Kandy, and Batticaloa districts
- Investments in the pharmaceutical sector (products & medical devices) in the dedicated state-of-the-art investment zone in Hambantota
- Investments in textile manufacturing in the textile zone in Eravur
- Investments in floating solar plants
- Investment opportunities under SDP Act
Apart from the above, an array of benefits including exemptions from Customs Duty, VAT, PAL, CESS etc. are available for the right investment depending on the sector of investment and its market orientation.
Benefits continued under the IR Act No. 24 of 2017
- CIT exemptions for farming including agriculture, livestock and fish farming w.e.f. 01 April 2019
- CIT exemption for Information Technology and enabling services, w.e.f. 01 January 2020
- CIT exemption for income earned from services rendered to persons outside Sri Lanka including foreign-sourced earnings in foreign currency
- Dividend Tax exemption for dividends paid by a resident company to any non-resident person and dividends distributed by Commercial hub Enterprises w.e.f. 01 January 2020.
- CIT exemption for Income derived by any non-resident person from laboratory services or standards certification services, w w.e.f. 01 January 2020
Exemptions continued under VAT (Amendments to VAT Act, No.14 of 2002)
- Sale of Condominium housing units from VAT w.e.f 01 December 2019
- IT and enabling services w.e.f 01 January 2020
- Reduced VAT of 8% other than financial services w.e.f. 01 December 2019
- Quantities supplied/donated of health-protective equipment and similar products by export-oriented BOI companies to the Ministry of Health and Indigenous Medical Services, Department of Health Services, Tri Forces, and Sri Lanka Police on their request.
- Reduction of piece-based VAT Rate applicable on domestic sale of certain garments by the export-oriented BOI companies from Rs.100/- to Rs.25/-