New Regulations Offer Up to 10‑Year Tax Breaks for Big Investments in Key Sectors

COLOMBO (News 1st); The Government of Sri Lanka has published new regulations outlining eligibility criteria and tax concessions for projects seeking classification as Strategic Development Projects (SDPs) under the Strategic Development Projects Act, No. 14 of 2008.

The regulations, issued in Gazette Extraordinary No. 2474/66 dated 08 February 2026, were promulgated by Minister of Finance, Planning and Economic Development Anura Kumara Dissanayake in accordance with powers vested under Section 4F of the Act, read with Section 3.

The newly released Schedule specifies sector‑wise investment thresholds, minimum local job creation requirements, tax holidays, and import‑related exemptions applicable to qualifying projects.

The framework covers three broad categories—Infrastructure Services & Utilities; Tourism & Leisure (excluding casinos and all forms of betting and gaming); and a wide manufacturing and services cluster that includes agriculture, education, technology and ICT.

Under the regulations, projects in the Infrastructure Services and Utilities sector require investments exceeding USD 50 million but not more than USD 150 million, with a minimum of 100 local jobs, to qualify for a six‑year corporate income tax holiday.

Tourism and leisure projects begin eligibility at investments above USD 150 million, with tax holidays ranging from eight to ten years based on investment scale.

Manufacturing projects are required to invest more than USD 50 million and create at least 250 local jobs, with tax holidays of five to ten years depending on whether investment exceeds USD 100 million or USD 150 million.

Agriculture sector projects must likewise exceed USD 50 million in investment but require a minimum of 50 local jobs, qualifying for five‑year tax holidays. Educational, technological, and ICT establishments must invest more than USD 100 million and create at least 50 local jobs to receive tax holidays of eight to ten years.

In addition to corporate income tax concessions, qualifying projects will receive exemptions from Customs Import Duty (CID), Value Added Tax (VAT), Ports and Airports Development Levy (PAL), and CESS during the project implementation period for the importation of capital goods and construction materials. The regulations clarify that these exemptions will not apply to motor vehicles intended for travel or personal use.

Corporate income tax exemptions will apply to all gains and profits of an SDP as defined under the Inland Revenue Act, No. 24 of 2017, and will take effect from the commencement of commercial operations.

Once the tax‑exemption period lapses, projects will be liable for taxes under prevailing laws.

The project implementation period is defined as beginning on the date stipulated in the agreement between the enterprise and the Board of Investment (BOI) and ending on the date commercial operations commence, as certified by the BOI.