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Major tax sweeteners for $220m Hambantota refinery
View(s):A US$220m (Rs. 27.6 billion) joint Indo-Lanka sugar refinery project planned for the Hambantota Free Port Area has been granted numerous tax concessions by the Minister of Investment Promotion, Lakshman Yapa Abeywardena. These will include exemptions from customs levies, import and export regulations and as well as exchange control acts and regulations. The refinery will import raw sugar for refining and sale both here and for the export market.
The Sri Lanka subsidiary of the Indian company, Lanka Sugar Refinery Company (Private) Limited entered into a Project Agreement with the Board of Investment last February. Exchange control exemptions granted for export-oriented projects will be granted, entitling the company to open and operate Foreign Currency Banking Unit (FCBU) account in any commercial bank in Sri Lanka.
The exemptions on customs duty will be applicable to all capital goods imported solely for the project, and all imports and local purchases of capital goods for the business will be exempt from payment of customs duty. The company will also get an exemption from the special commodity levy on import of raw material.
The other concessions include 10 years’ corporate income tax holiday, exemptions from payment of withholding tax on interest paid on foreign loans obtained for capital expenditure and on technical fees paid to consultants employed on the project. Tax on dividend distributed to shareholders out of profits will be exempted from income tax for 10 years and tax concessions will be given on Value Added Tax, the Port and Airport Development Levy and the Nation Building Tax.
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