TAX BREAKS FOR LARGE-SCALE FDIS

• The govt. will offer tax concessions for investments over $ 50 m, with IMF approval
• The move aims to double FDIs to $ 2 b next year

Sri Lanka is looking to provide tax concessions for individual commitments of more than $ 50 million in foreign direct investments (FDI) after convincing the International Monetary Fund (IMF), Board of Investment of Sri Lanka Chairperson Arjuna Herath said.

Speaking to Reuters, Herath said that as part of a target to double FDIs to about $ 2 billion next year, the government has convinced the IMF to allow tax concessions, tax-free periods, customs and excise duty concessions for individual commitments of more than $ 50 million.

“The IMF said if you want concessions, you have to be rule-based and transparent,” Herath told Reuters. “So we have negotiated that, and the government is hoping to announce that very soon for high-threshold investments to try and grant concessions and incentives.”

An IMF spokesperson has told Reuters that a team from the global lender would visit the country from 24 September to 9 October to review “new data and the fiscal policies for Sri Lanka’s economic reform programme supported by the IMF’s extended fund facility.”

The BOI is also attracting nearly $ 100 million across six projects to grow cannabis for medical oil exports to the US and Europe. Cultivation will begin in secured zones, initially using container-based pilots, Herath said.

Meanwhile, Economic Development Deputy Minister Prof. Anil Jayatha Fernando told Reuters that Sri Lanka’s economy could grow by up to 6% next year and reach 8% in subsequent years, following contractions in 2022 and 2023 and an expected rebound of up to 4.5% this year.

To achieve that, he said the government is chasing higher investments from countries including China, India, Japan, and the United Arab Emirates (UAE).

Source: The morning