The Indian company that will set up the 500 MW coal-fired power plants at Sampur will be given a 25-year tax exemption, including exemptions from customs duties for the import of coal, raw material and spare parts, according to a gazette notification.The agreement for this joint venture was finalized recently between the Ceylon Electricity Board and the National Thermal Power Corporation Limited (NTPCL) of India. Construction is to begin next year and the US $ 500 million plant, scheduled to be commissioned by 2016, will be operated on a Build-Own-Operate (BOO) basis.
The tax concessions were announced in a gazette notification issued by Economic Development Minister Basil Rajapaksa under the Strategic Development Projects Act.
The tax concessions for the Indian company include a 25-year corporate income tax holiday period starting from the first year in which the company makes taxable profit or two years after the start of commercial operations, whichever comes first.
The company will also be exempted from withholding tax on interest paid on foreign loans obtained for capital expenditure, and on technical fees paid to consultants employed in the project.
The dividend distributed to shareholders out of profits will also be exempted from income tax during the period while an eight year tax exemption from PAYE tax will be granted to a maximum number of five expatriate staff of the company.
The payment of Value Added Tax (VAT) on the import of project related goods and the local purchases of project related goods and services, including payments payable to contractors and sub-contractors will also be exempted during the implementation/construction period of five years.
The import of coal, raw material and spare parts will be exempted from the Ports and Airports Levy and the Nation Building Tax Act for 25 years. Exemption from Customs Duty will be applicable to all project related items including equipment and fuel.
The Government has allocated a 500-acre land in Sampur for the construction of the plant and the Indian government has offered a concessionary line of credit of US$ 200 million to Sri Lanka to expedite construction work. |
E-mail
