The Colombo Port City (Guidelines on the Grant of Exemptions and Incentives to Businesses of Strategic Importance) Regulations, No. 2 of 2023 expired in August 2025 and have been replaced by Regulations No.1 of 2025. The new framework introduces more limited incentive periods and establishes higher eligibility thresholds for qualifying investments.
The salient provisions are as follows:
I. Primary Businesses of Strategic Importance (“Primary BSI”)
An authorized person engaged in business within the Port City (i.e., any entity to which a license has been granted by the Colombo Port City Economic Commission to engage in business within the Colombo Port City) may be designated as a Primary BSI upon making the prescribed investment in the lease and development of a plot of land within Port City and meeting the specified employment generation criteria set out below.
| Category | Minimum Investment (USD) | Land Type | Minimum Employment | Maximum Project Implementation Period** |
|---|---|---|---|---|
| A | 100 million | Per plot (or pro-rata in a subdivided plot) | 300 | 5 |
| B | 500 million | Per plot (or pro-rata in a subdivided plot) | 300 | 6 |
| C | 1 billion | Per plot (or pro-rata in a subdivided plot) | 300 | 8 |
| D | 25 million | Plots designated for Marina or Social Infrastructure* | 100 | 4 |
Note:
*’Marina’ and ‘Social Infrastructure’ are terms defined under the Colombo Port City (Development Control) Regulations. “Marina” means the land plots designated for the Marina Commercial land use and Marina facility land. Social Infrastructure means the land plots designated for education, cultural, healthcare and convention center land use.
** The Project Implementation Period commences from the date of publication of the Order in the Gazette designating a business as a Primary BSI. This period ends upon the earlier of (a) the issuance of the certificate of conformity in respect of the development; or (b) the maximum period specified in the table above based on the relevant category.
Exemptions and Incentives
Primary BSIs are entitled to the following:
(a) Exemptions during the Project Implementation Period under the following enactments:
- The Customs Ordinance (Chapter 235),
- The Ports and Airports Development Levy Act, No. 18 of 2011,
- The Sri Lanka Export Development Act, No. 40 of 1979.
(b) Exemptions from corporate income tax (applicable to all gains and profits) commencing upon expiry of the Project Implementation Period:
| Category | Duration of exemption from corporate income tax |
|---|---|
| A | 10 years |
| B | 12 years |
| C | 15 years |
| D | 8 years |
After expiry, liability arises under the Inland Revenue Act, No. 24 of 2017 (as amended) (“Inland Revenue Act”).
(C) Further exemptions (with effect from the date of the Order published in the Gazette designating a business as a Primary BSI):
- The Betting and Gaming Levy Act, No. 40 of 1988
- The Entertainment Tax Ordinance (Chapter 267)
- The Foreign Exchange Act, No. 12 of 2017
- The Termination of Employment of Workmen (Special Provisions) Act, No. 45 of 1971.
II. Secondary Businesses of Strategic Importance
A Secondary Business of Strategic Importance (“Secondary BSI”) is an authorized person carrying on business within the Port City, identified as a BSI but not qualifying under Categories A–D above.
Incentives for Secondary BSIs
(a) Exemption from the following enactments until the commencement of commercial operations (identical to those applicable to Primary BSIs during the Project Implementation Period specified above):
- The Customs Ordinance (Chapter 235),
- The Ports and Airports Development Levy Act, No. 18 of 2011
- The Sri Lanka Export Development Act, No. 40 of 1979.
(b) Concessions from corporate income tax – all gains and profits taxed at a concessionary rate of 7.5% for a period of 4 years, commencing from the date of commencement of commercial operations. Thereafter, liability arises under the Inland Revenue Act
(c) Further exemptions (with effect from the date of publication of an Order in the Gazette designating the business as a Secondary BSI):
- The Entertainment Tax Ordinance (Chapter 267),
- The Foreign Exchange Act, No. 12 of 2017,
- The Termination of Employment of Workmen (Special Provisions) Act, No. 45 of 1971.
III. General Provisions
- The incentives granted under the Regulations No.1 of 2025 are non-negotiable and non-renewable.
- These Regulations will remain in force for 05 years from the date of coming into operation, unless repealed or amended earlier and shall cease to have effect on the expiry of such period.
- The concessions and exemptions outlined in the Regulations No. 1 of 2025 will apply to new registrations, while authorized persons registered prior to the issuance of these regulations will continue to enjoy the benefits under the previous framework.
Disclaimer: This information is provided for general information purposes only and does not constitute legal advice. Readers should not rely on it as a substitute for specific legal advice in relation to any particular matter.
For further information, please contact:
Ushara Ratnayaka, D. L. & F. De Saram
ushara@desaram.com
