Foreigners purchasing land in Sri Lanka
View(s):Open letter to the BOI
I get different answers from different institutions on the issue of foreigners purchasing land in Sri Lanka. I shall be thankful if the Board of Investment (BOI) could clarify the following:
1. Who is a foreigner? Is he an individual or an institution or both? Could our expatriates living abroad be considered locals?
2. What are the exemptions available for foreigners/foreign firms? For instance if they start a project with a total investment of US$10million or if they start a project that will construct more than 100 apartments, are these projects exempted from the ban. If yes then should they pay any tax on the purchase of the land?
3. Could foreigners buy apartments over and above the 4th floor without having to pay any taxes?
4. Could foreigners buy shares in a local company and take control of that company? The company will have land, etc.
5. Are foreigners banned from buying land in order to construct a hotel say a 3-star hotel?
6. Could a company where foreigners own not more than 25 per cent of the issued share capital buy land?
7. Could a foreign firm to start a project, buy land where the cost of the land is less than 20 per cent of the total cost of the project?
8. Could an existing foreign firm /project buy new land?
9. There are many firms which had purchased land prior to the new law (ban). Can they now transfer shares to new foreign ownership?
10. If foreign firms lease out land from the locals for the purpose of a project (say a BOI project) are they subjected to 100 per cent tax?
11. In the case of Sri Lankan-born people now living overseas with foreign passport wanting to invest in projects in Sri Lanka, could they buy land for a project? If yes are they subject to a 100 per cent tax?
12. A foreign company … say a BOI company forms another subsidiary company (therefore this new company becomes a local company) to buy land and do a project. Is this in order?
13. A local company with Sri Lankan shareholders buys the land and then invites the foreigners to come and invest in the construction of the buildings and other capital goods such as plant and machinery and issue preference shares to the foreigners for the equivalent of their investment. Or issue redeemable debentures with an option of converting into equity after … say five years. Is this in order?
I shall be thankful if the BOI will provide us clear answers without ambiguities. It is very urgent since foreigners are all confused and moving out of Sri Lanka since we are unable to provide them with clear answers for these questions pertaining to purchase of land. The motive of this open letter is to elicit information to all Sri Lankans!
M.H.M.Faizer
Business Consultant
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