The Hon. Nishantha Jayaweera - Deputy Minister of Economic Development

¶ 01 Hon. Speaker, today we take up for debate the Colombo Port City Economic Commission (Amendment) Bill. There is a reason this Amendment is before Parliament. A Special Committee has conducted a structured review of Act No. 11 of 2021 and submitted recommendations. Taking those into account, on 24 November 2025, the Cabinet decided to present this Bill to Parliament to remove impediments to investor attraction and to align with modern global legal standards by introducing these Amendments and thereby amend the existing law. Let me first outline what this Bill brings.

¶ 02 First, tax incentives. The Bill introduces a revised tax regime and identifies two principal business categories: - Primary Business of Strategic Importance (PBSI) - Secondary Business of Strategic Importance (SBSI)

¶ 03 Under PBSI, investors are tiered primarily by investment size and job creation: - US$ 100 million investment: 10-year corporate income tax holiday; project implementation period extended up to 5 years. - US$ 500 million investment with 300 jobs: 12-year corporate income tax holiday; 6-year project implementation period. - US$ 1 billion investment with 300 jobs: 15-year corporate income tax holiday; 8-year project implementation period. - US$ 25 million investment with 100 jobs: 8-year corporate income tax concession; 4-year project implementation period.

¶ 04 Additionally, during the project implementation period, all imports for the project will be exempt from Customs Import Duty, PAL and CESS. However, these investors are liable for VAT; yet since their output tax is zero-rated, they will be able to obtain refunds of input VAT paid on imports.

¶ 05 For SBSI investors, there will be a concessionary corporate income tax rate of 7.5 per cent for up to 4 years. They too receive exemptions from Customs Import Duty, PAL and CESS. These are the principal tax incentives proposed.

¶ 06 Tax concessions are not the sole determinant for investors. Three decisive factors matter: 1) Macroeconomic and political stability. With the National People's Power Government, strong economic and political stability have been established; fiscal discipline and anti-corruption efforts have improved ratings. 2) Infrastructure. The 2026 Budget provides measures to improve infrastructure. 3) Skilled labour and a strong workforce. We have quality human capital and are expanding skills training.

¶ 07 Sri Lanka has double taxation avoidance agreements with 46 countries. Investors from treaty countries can credit Sri Lankan taxes when remitting profits, so concessions are one element but not the only decisive factor.

¶ 08 The Bill also addresses APIT. Existing registered investors will have an APIT exemption for employees for three years from one month after enactment, while new investors’ employees will be liable to APIT.

¶ 09 Compliance and supervision are strengthened. From commencement, investors must file income statements with the Inland Revenue Department. Provisions enhance transparency, mandate periodic compliance reviews, and require the Ministry of Finance to conduct quarterly performance-based evaluations. Regulatory changes also rationalize fees. Previously, applicants had to pay land use and related charges at application; now, only the application fee is paid initially, and other charges become payable upon approval and registration.

¶ 10 Provisions are included for periodic disclosure and estimation of foregone revenue from tax incentives, and to align with international standards for effective compliance.

¶ 11 On economic performance: in 2025, exports reached US$ 17.2 billion. The Export Development Board implemented over 122 actions. The Export Development Council of Ministers introduced the Tourist VAT Refund System at BIA. Policy steps were taken for the gem and jewellery industry, and a five-year export diversification roadmap was launched, targeting exports of US$ 36 billion in five years. Worker remittances reached US$ 7.8 billion, the highest in history. Tourism earnings reached US$ 3 billion. FDI exceeded US$ 1 billion. The current account posted a surplus of US$ 1.7 billion. For the first time, actual revenue exceeded the Budget’s revenue estimate.

¶ 12 Thank you.