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Investment with Tax Incentives

Investment with Tax Incentives (Section 17) - (As per Budget 2012)

A new tax incentive regime has been introduced with the budget 2012 to promote private investments, both domestic and foreign. These new incentives are applicable to following categories of investments.

1.Small Enterprises

2.Medium Enterprises

http://www.wendangku.net/doc/14ec04f10242a8956bece4cf.htmlrge Enterprises

4.Project Expansions

5.Strategic Import Replacement Enterprises

The details of the qualifying investment and the incentives granted for the enterprises under each category are highlighted below.

1) Small Scale – New Enterprises

New enterprises engaged in any of the following activities, provided that the investment is made on or before 31st March 2015 will be eligible to tax holidays as follows.

Category

Qualifying Criteria Tax Incentives Min.

Investment*

(Rs. Mn)

Min. Export

Req. (% of

Output)

Full Tax

Holiday (years)

1.Manufacturing(Other than any

liquor or tobacco products) for

domestic and/or export market

50 4

2.Agriculture

Agriculture and/or Agro

Processing Animal Husbandry

25 4

and/or Processing Fisheries

and/or Fish Processing.

3.Services

Creative work including art work

25 4

Information Technology

Essential Services related to

Agriculture & Animal Husbandry

*Minimum Investment means the value of “fixed assets” such as land, plant, machinery and equipment.

?Custom duty will be exempted on imports of;

?Project related capital goods and,

?Raw materials of export oriented projects

2) Medium Scale - New Enterprises

New enterprises engaged in "specific activities" provided that the investment is made on or before 31st March 2015 will be eligible to tax holidays as follows.

Category

Qualifying Criteria Tax Incentives Min.

Investment*

(Rs. Mn)

Min. Export

Req.

(% of

Output)

Full Tax Holiday

(years)

1. Manufacturing

Other than any liquor or tobacco 50 – 100

4

products)**

100 – 200

Over 200 5 6

2. Agriculture

Agriculture and/or Agro processing,Animal Husbandry and/or processing,Fisheries and/or Fish processing

50 – 100

100 – 200

Over 200

4

5

6

3. Services

Information Technology 50 – 100

4

Software Development

Business/ Knowledge Process Outsourcing

Health Care

Education

Beauty care

Cold room and storage

Tourism

Sports and fitness centers Creative work including art work 100 – 200

Over 200

5

6

*Minimum Investment means the value of “fixed assets” such as land, plant, machinery and equipment.

** Products covered by this provision shall satisfy the Rules of Origin criteria which includes

?a) Minimum of 35% domestic value addition

?b) Sufficient Process and,

?c) Transformation of H.S. Code at 4-digit level in converting imported inputs into final product.

?Custom duty will be exempted on imports of;

?Project related capital goods and,

?Raw materials of export oriented projects

3) Large Scale – New Enterprises

A 6 -12 year tax holiday period has been introduced to large scale projects engaged in "specific activities".

Category

Qualifying Criteria Tax Incentives Min.

Investment*

(Rs Mn)

Min. Export Req. (%

of Output)

Full Tax Holiday

(years)

1.Agriculture or Forestry

Cultivation of food crops, industrial crops or horticulture Forestry Animal Husbandry:

Dairy, poultry, Swine, Goat 300 – 500 500 – 700

700 – 1,000 6 7 8

etc.

1,000 – 1,500

1,500 – 2,500

Above 2,500

9 10 12

2. 2.1 Manufacturing Manufacturing, Production or processing of non-traditional goods for exports, including deemed exports;

300 – 500 500 – 700

700 – 1,000

90% (75% for Apparel

& Textile)

6

7 8

1,000 –1,500 1,500 –2,500 Above 2,500

9 10 12

2.2M anufacturing for domestic

and/or export market

a) Boats, Pharmaceuticals, Tyres and Tubes, Motor Spare Parts, Furniture, Ceramics, glass ware or 300 – 500 500 – 700

700 – 1,000 N/A

6

7

8

other mineral based products, rubber based products, Cosmetic

products, edible products manufactured out of locally cultivated agricultural products, construction materials.

1,000 – 1,500

1,500 – 2,500 Above 2,500

9 10 12

3. Services

Provided to a person or partnership outside Sri Lanka***

300 – 500

500 – 700

6 7 8

?

Tourism or Tourism Related Projects,

?

Providing Hotel Services, Guest Houses or Similar Services,

?

Infrastructure Projects including Construction of

Commercial Buildings,

?

Development of any warehousing or storage facility,

700 – 1,000

1,000 – 1,500

1,500 – 2,500

Above 2,500

9 10 12

?Power Generation

using Renewable

Resources

?Establishment of

Industrial Estates,

Special Economic

Zones or Knowledge

Cities,

?Urban Housing or Town Centre Development, ?Provision of Any

Sanitation Facility

or Waste Management

Systems,

?Development of Water Services,

?Development of

internal water ways,

and /or related

transport

(passenger/freight) ?Construction of

Hospitals and

Provision of Health

Care Services,

?Maintenance /repair

of maritime vessels/

aircrafts

?Sporting Services

(e.g. Motor Racing or

Golf Course)

?Information

Technology

?Software development ?Business/knowledge process outsourcing ?Any Project in Light or Heavy Engineering

Industry,

?Artificial

insemination for

cattle (Dairy

development)

?Higher

Education/skills

Development /adult

education

?Processing & Solid

Waste Management

*Minimum Investment means the value of “fixed assets” such as land, plant, machinery and equipment

*** 70% of turnover should be in convertible foreign currency as applicable

?Custom duty will be exempted on imports of;

?Project related capital goods and,

?Raw materials of export oriented projects

4) Expansion of Existing Enterprises

To encourage project expansions, special incentive scheme has been introduced for existing enterprises (applicable for both BOI & Non-BOI enterprises).

Category

Qualifying

Criteria Tax Incentive Min. Min.

Investment (Rs Mn) Export Req. (%

of Output)

Any Existing

Enterprise

50

The investment will be treated as a qualifying payment deductible from the assessable income of

the enterprise subject to a maximum of 25% of the

investment for each year of assessment falling within the period of 4 years commencing from the

year of investment since 01.04.2011.

5) Strategic Import Replacement Enterprises

To encourage import substitution, tax incentives have been granted for both new and existing enterprises (applicable for both BOI & Non-BOI enterprises) engaged in the following sectors.

Sector

Minimum

Investment

(USD. Mn.)

Tax Incentive

New Enterprises

Existing Enterprises i. Fabric 5

5 years Tax holiday

followed by a

concessionary tax

rate of 12%

concessionary tax rate (12%) for 5 years coupled with, qualifying

payment relief (Investment is

considered as a qualifying payment

deductible from the assessable

income of the enterprise subject to

a maximum of 25% of the investment for

ii.

Pharmaceutical 10

iii. Milk

Powder 30

iv. Cement

50