The Hon. (Dr.) Anil Jayantha

¶ 01 You are asking about strategy. Strategy is broad and cannot have a rigid definition. There is inevitably some subjectivity, but decisions are made case-by-case based on national interest, guided by the four criteria: foreign exchange, jobs, technology transfer, and infrastructure.

¶ 02 On incentives: under Act No. 14 of 2008, there was a flat approach like granting tax holidays for 25 years. At times such incentives can catalyse investment, but today incentives must be based on clearly defined criteria, not blanket discretion. Research suggests large investments can typically recover (“break even”) in about 10 years. Therefore, the maximum tax holiday we provide is up to 10 years; no extension beyond that period.

¶ 03 Globally, with multinational groups and profit shifting, source jurisdiction becomes less decisive. Hence we propose a minimum 15 per cent tax in line with BEPS principles to prevent base erosion and profit shifting.

¶ 04 A further feature: once the holiday period lapses, it will not be extended; the project must show profits thereafter and pay the appropriate tax.

¶ 05 Beyond incentives, rule-based promotion relies on the country context: political stability, transparency in transactions and investment, and the Ease of Doing Business. We are strengthening these foundations.

¶ 06 On the Social Security Contribution Levy (SSCL), there is public misunderstanding about cascading. For motor vehicle imports, the cascading effect will not occur because SSCL is charged at import; it is not re-calculated on secondary sales. We have removed that, simplifying computation and eliminating market distortions.

¶ 07 Under the Central Bank of Sri Lanka Act rules adopted today, exporters are allowed to invest domestically in dollar bonds.

¶ 08 These amendments help sustain stability, fiscal discipline, and consolidation, while creating a transparent environment that builds investor confidence. I conclude.

¶ 09 Thank you.