News
Draft laws on ‘Free Ports’, related tax exemptions in the House
View(s):By Chandani Kirinde
The declaration of “Free Ports ” and to provide tax exemptions to those operating such bonded areas, are among new draft laws hurriedly presented to Parliament this week.
Minister Nimal Siripala de Silva, Leader of the House, who introduced 21 Bills, said they would be taken up for debate later this month and approved. Under amendments to the Finance Act in 2012, exemptions were given only from customs, exchange control and import-export levies, to areas declared as Free Port or Bonded Areas, but with the new amendments, the exemptions will be given from six other taxes.
These include the Value Added Tax (VAT), the Nation Building Tax (NBT), Special Commodity Levy, Ports and Airports Development Levy as well as Excise (Special Provisions) Act and the Sri Lanka Export Development Act. The exemptions will apply to BOI registered companies engaged in entrepot trade involving import, minor processing and re-export, offshore business where goods can be procured from one country, to be manufactured in another country and shipped to a third country, without bringing them into Sri Lanka.
A Free Port has been described as an area within a sea port or an island dry port, operating under the supervision of the Sri Lanka Ports Authority, while Sri Lankan territory, in terms of the Act, has been described as the territory of Sri Lanka, and does not include any Free Port or a Bonded Area to be declared under this Act.
The new tax concessions will also apply to businesses that provide front-end services to clients abroad. The other businesses that will get these exemptions are those with headquarters operations of leading buyers for management of finance supply chain and billing operations, as well as those that provide logistic services such as bonded warehouse or multi-country consolidation in Sri Lanka. The enterprises that are engaged in the physical importation of goods, wares or merchandise for re-export, will be required to carry out such activities in a Free Port operated under the supervision of the SLPA or, a bonded area declared under the BOI law of Sri Lanka.
Along with this, the Ports and Airport Development Levy Act will be amended to exempt from this tax, any tools, materials, consumables to be used in petroleum related operations conducted within or outside Sri Lanka or, from bonded facility for storage, repairing services, exploration etc.
Follow @timesonlinelk
comments powered by Disqus