News
Two multimillion projects get extensions to start commercial operations
The Finance Ministry has granted more extensions to two long-overdue multimillion-dollar mixed development projects–an Indian investment on Galle Face and a Chinese investment on R. A. De Mel Mawatha–to start commercial operations.
Welcomhotels Lanka (Pvt) Ltd, a fully-owned subsidiary of India’s ITC Ltd, is building a mixed utility complex on 5.86 acres of sea-facing land in Galle Face. It includes a luxury hotel.
Avic International Hotels Lanka Ltd, a subsidiary of the Aviation Industry Corporation of China, is building a mixed development project with apartment complex at 418, 420 and 422 R. A. De Mel Mawatha in Colombo 3. It is called Astoria.
Finance Minister Mahinda Rajapaksa has issued a gazette allowing Avic a further 19 months (backdated from March 25, 2020) “without extending the duty-free facility for construction-related items”. Commercial operations are therefore expected to start on October 24 this year.
WelcomHotels has been given an extension of 18 months starting January 1 next year. They are thereby expected to begin commercial operations on June 30, 2023.
The Avic project was first gazetted under the Strategic Development Act in early 2014, seven years ago. It was given 60 months to start commercial operations from the date stated in its project agreement with the Board of Investment (BOI). It was also granted a string of generous tax holidays. In December 2017, Avic was allowed its first extension of 90 months.
The Welcomhotels initiative goes back even further. It was gazetted in October 2012, nine years ago, under the same legislation with similar tax breaks.
These include exemption of corporate income tax on the projects’ profits for ten years (six years for income generated through apartment sales). Thereafter, it is liable to pay only 50 percent of corporate tax for a further 15 years on profits generated from activities other than the sale of apartments.