BOI to target more strategic investments with tremendous opportunities provided by Budget

By Charumini de Silva

The Board of Investment of Sri Lanka (BOI) said yesterday it will target more strategic investments following the tremendous opportunities provided by 2021 Budget, which was approved in Parliament on Saturday (21 November). 

BOI trusts that incentives are part of the landscape of the investment strategy to attract sustainable investments, as they are often a decisive factor in investment decision-making. 

“Combined with the more obvious hard infrastructure offerings, locational benefits, sound legal framework and access to talent pools, investment incentives are another important piece of the puzzle to attract investments, which could also open doors to other economic benefits including technology clusters, skills development and linkage to global value chains,” BOI Director General Sanjaya Mohottala told the Daily FT. However, he said incentives alone will not be a positive signal to attract investors unless there is an assurance of its consistency. In that context, the BOI has been craving for a consistent investment policy environment for the promotion of identified thrust sectors. 

“With the incentives offered to investors by the 2021 Budget presented by Prime Minister and Finance Minister Mahinda Rajapaksa, along with the endorsement by the Government for a consistent policy environment, has fulfilled the aspirations of BOI as the national investment promotion agency,” the Director General emphasised.

“Now BOI has much to play with when it comes to enticing investors with discretionary dollars and much to gain by attracting top-notch investors to establish in the country, which would provide anticipated economic and social benefits,” Mohottala added. 

Some of the new openings for investments introduced in the 2021 Budget include five fully-fledged plug and play Techno Parks in Galle, Kurunegala, Anuradhapura, Kandy and Batticaloa districts; investments in the pharmaceutical sector (products and medical devices) in the dedicated state-of-the-art investment zone in Hambantota; investments in textile manufacturing in the textile zone in Eravur; Investments in floating solar plants and Investment opportunities under the SDP Act. For more detailed specific concessions see table. 

Apart from those, Mohottala said an array of benefits, including exemptions from Customs Duty, VAT, PAL, CESS, etc., are available for the right investment, depending on the sector of investment and its market orientation. 

Furthermore, benefits continued under the Inland Revenue Act No.24 of 2017: CIT exemptions for farming including agriculture, livestock and fish farming with effect from 1 April 2019; CIT exemption for Information Technology and enabling services, with effect from 1 January; CIT exemption for income earned from services rendered to persons outside Sri Lanka including foreign sourced earnings in foreign currency; Dividend Tax exemption for dividends paid by a resident company to any non-resident person and dividends distributed by Commercial hub Enterprises with effect from 1 January; and CIT exemption for Income derived by any non-resident person from laboratory services or standards certification services, with effect from 1 January.

Exemptions continued under VAT (Amendments to VAT Act No.14 of 2002) include: sale of condominium housing units from VAT with effect from 1 December 2019; IT and enabling services with effect from 1 January; reduced VAT of 8% other than financial services with effect from 1 December 2019; quantities supplied/donated of health protective equipment and similar products by export-oriented BOI companies to the Ministry of Health and Indigenous Medical Services, Department of Health Services, Tri-Forces and Police on their request; and reduction of piece-based VAT rate applicable on domestic sale of certain garments by the export-oriented BOI companies from Rs. 100 to Rs. 25.