📈 Govt. Amends Law for FDI Boost: Tax Incentives Revived for Strategic Projects

• Cabinet approved amendments to the Mahinda Rajapaksa-era Strategic Development Projects (SDP) Act to reintroduce tax incentives aimed at attracting large-scale Foreign Direct Investment (FDI). • The move seeks to circumvent existing limitations on tax concessions under the IMF program to revive critical, capital-intensive projects. • Key projects targeted include the US$ 3.7 Bn Hambantota oil refinery and various Port City projects, which were previously stalled due to the absence of tax benefits. • Cabinet Spokesman assures that the incentives are limited and project-specific, intended to support economic recovery while maintaining fiscal discipline under the IMF. • The decision faces caution: The IMF previously warned against tax exemptions weakening revenue performance. The World Bank and Human Rights Watch also cautioned on the adverse economic and social consequences of long-term tax holidays. • Local analysts highlight that granting tax concessions for projects like the Port City is seen as "unjust to other tax payers and corrosive to the broader economy."