Investment Guide of sri lanka

Prepared by

Research and Policy Advocacy Department

(In consultation with Sector Teams, Eng. Approvals Dept., Env. Dept. & Legal Dept.)

May, 2013

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Sri Lanka is regarded as a prime location in the Asian region for

foreign investors to setup their business entities. The strategic

location, prudent & pragmatic investment policies, economic &

political stability, low cost of doing business, talented and

productive human resource pool and fast developing

infrastructure facilities have made the country an enticing place

for investment.

Encouraged by the country's pro business environment, over

2,500 foreign companies representing more than 50 countries

have invested mainly in the manufacturing and service sectors in

Sri Lanka.

In order to ensure the smooth functioning of the business

activities, the Board of Investment of Sri Lanka (BOI) is entrusted

with the task of promoting, attracting and facilitating foreign &

domestic investment into the desired sectors of the economy.

Thus, the Research & Policy Advocacy Department of BOI has

compiled this Guide to Invest in Sri Lanka and a series of

Sectoral Brochures in consultation with the Sector Teams,

Engineering Approvals Department, Environment Department &

Legal Department, to ensure that the prospective investors are

provided with relevant and up-to-date information regarding the

investment approval process prevailing in Sri Lanka and to make

the entire investment process easy, fast and convenient as

possible.

Dr. Lakshman Jayaweera

Chairman/Director General

Board of Investment of Sri Lanka

February, 2013

20.3

8.5

USD 59.4 Bn

USD 2,923

6.4%

7.6%

USD 9,774 Mn

USD 19,183 Mn

USD 1,338 Mn

75.1 years

72.4 years

79.6 years

92.2% (average)

93.5%

91.1%

0.715

(92 out of 186 countries)

Vibrant Business Environment

Market-oriented economy

Well-developed financial and banking sector,

including 13 foreign banks

Wide use of English, especially in business,

legal and accounting practice based on the

British system

Large local business community with a long

history in international business links

Large foreign business community in all

business sectors with extensive trade links -

country's total trade was valued at USD

39,000 million in 2012

Colombo Stock Exchange : A growing capital

market

Economic Strength

Natural Resources : scenic beauty, wild life, beaches, fishery, gems, fertile soil, forestry

GDP Growth : 6.4% (2012)

Gross National Savings: 24% of GDP (2012)

Private Investment : 23.7% of GDP(2012)

Total External Assets (Months of Imports): 5.4

Booming Tourism Sector

Over 1 million tourist arrivals in 2012

A target of 2.5 mn tourist arrivals and 50,000 additional hotel rooms by 2016

Accelerated programmes to beautifing cities & lakes, ensuring a greener environment

Large Scale

Manufacture, Production or Processing

of non-traditional goods for export,

(including deemed exports)

Manufacturing for domestic and/or

export market

Small / Medium Scale

Agriculture, Animal Husbandry or Fishing

(including processing)

Manufacture of any article (including processing)

other than any liquor or tobacco products for

domestic and/or export market

Medium Scale

Large Scale

Agriculture or Forestry

- Cultivation of food crops or industrial crops

- Horticulture

- Forestry

- Animal Husbandry:

Dairy, Poultry, Swine, Goat etc.

- Boats

- Pharmaceuticals

- Tyres and Tubes

- Motor Spare Parts

- Furniture

- Ceramics

- Glass ware or other mineral

based products

- Rubber based products

- Cosmetic products

- Edible products manufactured

out of locally cultivated

agricultural products

- Construction materials

- Electrical/electronic goods

Small / Medium Scale

- Creative work including work of an artist

1,2

Development Permit

(Building Approvals)

Work Permit &

Residence Visa

(Ministry of Defense and Dept.

of Immigration & Emigration)

1

If applicable only 2

Refer Infrastructure Brochure for details 3

Residence visa can be obtained at any stage of the process

SIA : Securities Investment Account

FCBU : Foreign Currency Banking Unit

Work Permits / Residence Visa

As a policy, the BOI recommends granting visas to the foreign investors who have invested in

projects operating under Section 17 of BOI Law and projects operating under normal laws of the

country (Section 16 of BOI Law). On request of these companies, visas are recommended to

expatriates to be employed by these companies based on the following criteria.

a) Non availability of required technical skills or expertise in Sri Lanka

b) Investment made

c) Past performance

d) Nature of the project

To obtain residence visa, it is necessary to arrive in Sri Lanka on an Entry Visa issued by a Sri Lankan

Mission abroad with the concurrence of the Addl. Secretary/(Civil Security) Ministry of Defence

and Urban Development and the Controller General of Immigration and Emigration. The reason to

apply for Sri Lankan Residence Visa has to be mentioned when obtaining the entry visa and

following necessary supporting documents has to be submitted.

1) Company request

2) Visa applications

3) Certified copy of BOI certificate

(Certified copy of the letter of approval for section 16 projects)

4) Certified copy of the BOI agreement

5) Certified copy of the Articles of Association

6) Certified copy of Form I

7) Certified copy of Form 2A

8) A copy of the bio data page of the Passport

Residence visa is valid for one year or period recommended by the respective authority. It can be

renewed annually by submitting an application for the extension to the BOI.

(USD 110)

1. Corporate Tax Incentives for New Enterprises

1.1 Tax incentives with no minimum investment threshold

1.2 Small Scale Enterprises

1.3 Medium Scale Enterprises

1.4 Large Scale Enterprises

1.5 Strategic Import Replacement Enterprises

2. Project Expansions for Existing Enterprises

2.1 Small, Medium & Large Scale Enterprises


3. Strategic Development Projects

4. Import Duty Exemptions

5. Customs Duty , VAT and PAL Exemptions on imports of capital goods

(for Large Scale Enterprises and Strategic Import Replacement Enterprises)

6. Tax on Dividend Exemptions

7. Exemption on Exchange Control

Note : "Under the Inland Revenue Law, these incentives are offered to an "undertaking" as defined in the Inland

Revenue Act. However, for the purpose of BOI, the word "undertaking" is replaced by the word "enterprise" since

the BOI Law requires an investor to incorporate an enterprise before entering into an agreement with the BOI.

Manufacturing

(Other than any liquor or tobacco

products) for domestic and/or

export market

2

Sector

1. Corporate Tax Incentives for New Enterprises

1.2 Small Scale Enterprises

1.3 Medium Scale Enterprises

1

Amount of Investment means the cost of any land, plant, machinery, equipment and other fixed assets.2

Subject to 35% domestic value addition, If over 50% of production is sold in the domestic market.

N/A : Not Applicable

44

3

Sale of locally manufactured goods to local market by export oriented companies is allowed up to 40% of the total

annual production subject to payment of 12% corporate income tax (or 10% if domestic value addition is over 65%).

In addition, any other product (other than Garments, towels, bags made out of fabric, linen and curtains) are liable

to pay 12% Value Added Tax and 2% Nation Building Tax.

3

4

I

1.4 Large Scale Enterprises


2. Project Expansions for Existing Enterprises

3. Strategic Development Projects

A Project declared as a Strategic Development Project under the Strategic Development Projects Act,

which is in the national interest and which is likely to bring economic and social benefit to the country

and likely to change the landscape of the country, will be eligible for full or partial exemptions on

following taxes on case by case basis.

(I) Inland Revenue Act No.10 of 2006

(ii) Value Added Tax Act No.14 of 2002

(iii) Finance Act No.5 of 2005

(iv) Excise (Special Provision) No.13 of 1989

(v) Economic Service Charge Act No.13 of 2006

(vi) Customs Ordinance Chapter 235

(vii) Nation Building Tax Act No.9 of 2009

(viii) Ports and Airports Development Levy Act No.18 of 2011

(ix) Cess on importation of raw materials, during the project implementation period, in cases

where the required raw materials are not available in Sri Lanka for the required

quantity.

A special process has to be followed to declare a project as a strategic Development project by the

Parliament

4. Import Duty Exemptions

Exempted company is entitled to open and operate Foreign Currency Banking Unit (FCBU) in any

commercial bank in Sri Lanka. This facility is applicable for the income generated from the approved

business activity only.

Exempted/ 0%/ 12%

0.25%

For large scale or Strategic

Import Replacement

projects PAL will be

differed for plant,

machinery or equipment

during the project

implementation period

For large scale projects

engaged in construction

activities, PAL is exempted

for importation of project

related articles (not being

plant machinery or

equipment) subject to a

negative list during the

project implementation

period

2,275

775

1,030

Application Processing Fee

Sec. 17

Sec. 16

200

250

Agreement Processing Fee

Original Agreement

- Strategic Development Projects

- Other Projects

Supplementary Agreements

- For Expansions

- For Others

3,000

1,550

520

25

activities set out in the extraordinary Gazette No. 1533/ 16 dated 25-01-2008

All charges are liable to VAT 12%.

*These fees are subject to change from time to time

Annual License Fee

Sec. 16 300

Annual Fee (Per annum)

Colombo Municipal Council

Town Hall, Colombo 07, Sri Lanka

Tel : +94 11 2684291, 2684290

Fax : +94 11 2684290

E-mail : [email protected]

Website: http: www.cmc.lk

Department of Archeology

Sir Marcus Fernando Mawatha,

Colombo 07, Sri Lanka

Tel : +94 11 2692840, 2692841

Fax : +94 11 2696250


Website: www.archaeology.gov.lk

Website: www.doc.gov.lk

Line Agency Contacts Contd...

www.ird.gov.lk

, 2584984

[email protected]

Department of Railway

P.o. Box 355, Colombo, Sri Lanka

Tel : +94 11 2421281

Fax : +94 11 2446490


Website: www.railway.gov.lk

Department of the Registrar of Companies

400 D R Wijewardena Mawatha


Tel : +94 11 2689208

Fax : +94 11 2689211

E-mail: [email protected]

Website: www.drc.gov.lk

Geological Survey & Mines Bureau (GSMB)

569, Epitamulla Road, Pitakotte, Pitakotte, Sri Lanka.

Tel :+94 11 2886289 / 2886290

Fax : +94 11 2886273


Website: www.gsmb.gov.lk

Ministry of Agriculture (MOA)

Govijana Mandiraya

80/5, Rajamalwatta Road,

Battaramulla, Sri Lanka

Tel : +94 11 2869553, 2872093, 2872097

Fax : +94 11 2868910

Email : [email protected]

Web Site: www.agrimin.gov.lk

Ministry of Environment (MOE)

82,SampathPaya, Rajamalwatte Road,

Battaramulla, Sri Lanka.

Tel : +94 11 288211, +94 11 2882113

Fax : +94 11 2865452

Emai : [email protected]

Web Site: www.environmentmin.gov.lk


Ministry of Higher Education (MOHE)

18, Ward Place, Colombo 7, Sri Lanka.

Tel :+94 11 2694486, 2697133, 2697721, 2691378

Fax : +94 11 2697239


Web Site : www.mohe.gov.lk

Ministry of Indigenous Medicine

5th Floor, Ayurveda Teaching Hospital Complex,

Dr, N.M. Perera Mawatha, Colombo 8, Sri Lanka

Tel : +94 11 2 676376

Fax : +94 11 2 676377

Email:- [email protected]

Website : www.indigenousmedimini.gov.lk

Sri Lanka

National Gem & Jewellery Authority

No.25, Galle Face Terrace,Colombo 03, Sri Lanka

Tel : 094 11 2390645 -8 (Gen), 2390653 (Dir)

Fax : 094 11 2390649

E-mail :[email protected]

Website : www.srilankagemautho.com

Ministry of Livestock & Rural Community

Development

No. 45, St. Michael's Road, Colombo 03.

Tel : +94 11 2541369, +94 11 2338278

Fax : +94 11 2328117


Website: www.livestock.gov.lk

Ministry of Power & Energy

72, Ananda Coomaraswamy Mw.,


Tel : +94 11 2574922

Fax : +94 11 2574743


Website : www.powermin.gov.lk


Tel: +94 11 2677445

Fax: +94 11 2682534

E-mail: [email protected]

Sri Lanka Standards Institution

17, Victoria Place, Elvitigala Mw., Sri Lanka

Tel : +94 11 2677445

Fax : +94 11 2682534


Website: www.slsi.lk

+94 11 2875916-8

10 Sectoral Brochures

INVESTMENT GUIDE-Cover.pdfPage 1Page 2

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Investment Guide of sri lanka