By Saman Indrajith Courtesy The Island

January 27, 2017, 10:35 pm

The government has given an eight-acre land in Slave Island to a private company which would invest US D 429.5 million(Rs 64,425 million) to construct a multi-storeyed building complex as a re-development and mixed development project.

The government has granted an income tax holiday for 10 years and a tax exemption for six years to the investing company named One Colombo Project (Private) Ltd, according to a gazette tabled in parliament yesterday.

Chief Government Whip and Parliamentary Affairs and Mass Media Minister Gayantha Karunathilake presented the gazette on behalf of Minister of Development Strategies and International Trade Malik Samarawickrama.

According to the gazette, the One Colombo Project (OCP) shall implement and commence commercial operations in the said area within eight (08) years from the date of the project agreement signed between the Board of Investment of Sri Lanka and the OCP.

The provisions of the Inland Revenue Act No 10 of 2006 relating to the imposition of income tax (under Corporate Income Tax) shall not apply for a period of ten years to the profit of the project other than the sale of apartments and only a tax exemption of period of six years for the income generated through the sale of apartments.

“Dividends distributed to the shareholders out of the exempted profit shall be exempted from the income tax during the said tax exemption period of ten years or six years as the case may be and one year after,” the gazette says.

It says: “The company shall be exempted from the payment of Withholding Tax on the following: (a) on the interest on foreign loans taken for capital expenditure and technical fees paid to consultants ; (b) on management fees and royalty payments provided however the total of such charges does not exceed three per cent of the gross operating revenue; (c) on marketing fees provided however the total of such fees does not exceed 1.5 percent of the gross operating revenue; and (d) on incentive management fees provided however the total of such fees does not exceed 10 percent of the gross operating profit.

“The expatriate staff of the project company shall be exempted from the payment of Pay As You Earn tax subject to the restriction that this concession shall apply subject to the maximum number of 15 employees at any given time.

“All imports of project related goods and local purchases of project related goods or services required for the implementation of the projects as approved by the BOI, shall be exempted from the payment of VAT for eight years.

“The project company shall be exempted from the payment and charge of Ports and Airports Development Levy (PAL) for eight years.

The Project company shall be exempted from Construction Industry Guarantee Fund Levy.

The company has also been given an exemption of paying Customs duty on importation of project related items for eight years.

UPFA MP Bandula Gunawardena called on the Chair and asked the Speaker to give a debate on the matter.