| Shangri-La Investments Lanka (Private) Limited which will build a luxury hotel and residential villas in Hambantota at a total investment of around US$ 109 million (Rs. 12 billion) will get several tax-free concessions, the Government has decided, according to a gazette notification.
The company has spent around US$ 3.5 million (Rs. 386 million) to buy private land in Hambantota for the project which the government believes is in the national interest and will bring economic and social benefits to the country.
This company and Shangri-La Hotels Lanka (Private) Limited which will develop ten acres of land now occupied by the Army Headquarters in Colombo will jointly enjoy several tax benefits including a ten-year corporate tax holiday and a five-year tax exemption from PAYE tax for a maximum of 20 expatriate staff members of the companies.The project in Colombo will include a luxury hotel, high quality residencies and an upmarket shopping mall at a total investment of around US$ 283 million (Rs. 31 billion).
The other tax benefits for the companies include exemption from payment of Withholding Tax on interest on foreign loans taken for capital expenditure, technical fees to consultants as well as management fees, royalty payments and marketing fees if they are paid to three subsidiaries of Shangri-La Asia Limited.
The three subsidies are Shangri-La International Hotel Management Ltd – Hong Kong, Shangri-La International Hotel Management - BV and Shangri-LA International Hotel Management (Pvt) Limited - Singapore.
The companies will also be exempted from Value Added Tax (VAT) on importation and local purchases of project related goods and services during the construction period as well as Port and Aviation Levy while they will also get an exemption from Customs Duty on project-related imports.
Economic Development Minister Basil Rajapaksa notified the tax exemptions in a gazette notification recently. |
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