BOARD OF INVESTMENT ..!
BOARD OF INVESTMENT ..!
BOI
The Board of Investment of Sri Lanka (BOI) is the main institution that approves any foreign direct investments (FDI) or local investments.
BOI is governed by the Board of Investment Act No.4 of 1978 (BOI Act) and various amendments to the same Act.
It was established in 1978 under the name ‘Greater Colombo Economic Commission’ and currently has over 1700 projects.
Services provided by BOI to investors include import/export facilitation, industrial labor relations, legal services, engineering approvals, and environmental permits.
·
board of investment web site
What is the Board of Investment Act?
The BOI Act of Sri Lanka mainly refers to the Board of Investment Act No.4 of 1978 (BOI Act). However, there are six amendments to this Act which you can access below.
· Sri Lanka Board of Investment (Amendment) Act No : 43 1980
· Sri Lanka Board of Investment (Amendment) Act No.: 21 1983
· Sri Lanka Board of Investment (Amendment) Act No. : 49 1992
· Sri Lanka Investment Board (Amendment) Act No.: 09 2002
· Sri Lanka Investment Board (Amendment) Act No.: 36 2009
· Sri Lanka Investment Board (Amendment) Act No : 03 2012
· Collectively, these acts create the legal framework within which the BOI operates.
· However, investors must comply with a number of laws and regulations when applying to become a BOI registered company or conducting business in Sri Lanka.
Finance Act No. 12 of 2012
This Act was created to promote Sri Lanka as a trading hub and mainly deals with trade and service activities . It covers free ports and bonded areas and sets the basis for transactions in convertible foreign currencies.
Inland Revenue Act, No. 24 of 2017
This is the supreme law on taxation in Sri Lanka, applicable to both foreign and domestic investors.The law covers corporate income tax rates and exemptions in specific sectors such as SMEs, exports of goods, education, tourism, construction services, health services and agricultural processing. It also includes zero corporate income tax rates for exports of agricultural infrastructure, information technology and services.
Strategic Development Plans Act No. 14 of 2008
This law was introduced to cover projects of national interest. Schemes which include:
Strategic importance is attached to the provision of the proposed goods and services, which will be beneficial to the public
The country
has significant foreign exchange inflows.
Significant employment will be created and income-generating opportunities
will increase.
For the expected change in technology, specific tax incentives will be provided on a case-by-case basis.
i. Foreign Exchange Act No. 2017
· This Act repealed the Exchange Control Act (Chapter 423) and introduced a more liberal exchange regime for Sri Lanka It enabled investors to work directly with the banks of their choice and encouraged free transfers through inward investment service (IWS) accounts and outward investment accounts.
· In addition to this Act, all types of shares are exempted from being held by persons residing outside Sri Lanka There are certain other limitations and exemptions that must be followed when investing, acquiring or holding shares issued by companies incorporated in Sri Lanka.
· Exceptions:– The permission granted under the Act shall not apply to shares of a company intending to carry on any of the following businesses
i. Pawnbroking
ii. Retail trade with capital of less than five million US dollars
iii. Coastal fishing
Limitations:-
Foreign investments in the following areas will be permitted only up to 40% of the stated capital of such company:or if special permission has been granted by the Board of Investment of Sri Lanka for a higher percentage of foreign investment in any company, only above that. For such higher percentage
1) Sri Lanka's exports are the production of goods subject to internationally set quota restrictions.
2) Growth and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices
3) Mining and primary processing of non-renewable natural resources
4) Wood-based industries using local trees
5) Deep-sea fishing (defined by the Ministry assigned to the Fisheries Department)
6) Mass communication
7) Education
8) Freight forwarding
9) Travel agencies.
10) Agencies
Investment in shares of a company carrying on any of the business mentioned below is permitted only up to the percentage of the said capital of the company Such percentages must be subject to general or special authorization granted by the Government of Sri Lanka or any legal or administrative authority set up to authorize foreign investments in such businesses.
1. Air transport;
2. Coastal shipping (meaning shipping, as defined by the Ministry);
3. An industrial institution in the Second Schedule to the Industrial Promotion Act, No. 46 of 1990,
4. Any industry that manufactures weapons, ammunition, munitions, military vehicles and equipment, aircraft and other military hardware;
5. Poisons, narcotics, alcohols, dangerous drugs and toxic, hazardous or carcinogenic substances y industry that produces; Any industry that produces currency, coins or security documents;
6.Large-scale
mechanized stone mining;
5. Land Policy (Land Law)
a. Sri Lanka's land policy is made up of several laws, namely,
b. Land (Restrictions on Eviction) 2014
c. Land (Restrictions on Eviction) (Amendment) Act 2017
d. Land (Restrictions on Eviction) (Amendment) Act 2018
under the provisions of these laws, foreign investors can acquire land in Sri Lanka on a lease basis, subject to a maximum period of 99 years, and no lease taxes are levied. A companyThere are also provisions for direct transfer of ownership in situations where foreign ownership is less than 50%. These laws allow for direct purchase of condominium properties without any restrictions on citizenship.
What are the benefits of registering with BOI Sri Lanka?
Financial incentives
i. Enhanced capital allowance of 100%-150% in addition to normal depreciation on expenditure incurred on assets worth USD 3 million
ii. Capital allowances were increased by 200% in addition to normal depreciation for projects in the Northern Province.
iii.
Corporate income tax rate reduced by 14%-18% for specific sectors
iv.
Zero corporate income tax rate for agribusiness, IT and services
processing and export of services
v.
Dividend tax deductions
vi.
Port and airport tax exemptions
vii.
CESS exemptions on import of capital goods, raw materials and tourism
projects.
viii.
Value Added Tax Exemptions and Deferrals
ix.
Customs duty exemptions
Non-financial
incentives
a.
100% repatriation of foreign equity and income
b.
Access to BOI zones
c.
Investor services such as approval and facilitation for engineering
approvals, export/import documents and land allotments
d.
Foreign entry visa, residence visa, temporary visa and visa extension
facility
·
BOI Zones in Sri Lanka
·
Sri Lanka currently has 14 BOI Export Processing Zones, with plans for 3
additional BOI zones in the future.
How to set up a BOI registered company in Sri
Lanka?
·
While BOI facilitates foreign direct investment in Sri Lanka, there is
still a lengthy process to follow when doing this. For ease of reference, we
will break it down into 3 stages.
·
Phase 1 – Submission of BOI Sri Lanka application and obtaining initial
approval
· Depending on how you want to get permission, whether it is a Section 16 scheme or a Section 17 scheme, you will need to submit two different types of applications To apply, you must be a partner in a new company or a representative of a partner who has a letter of authority to act on their behalf
·
You will also need to pay the relevant application processing fee.
o For Section 17 permits with an investment of
less than US$25 million. , the fee is US$150.00+12% VAT. If the investment is
more than US$25 million. , you will have to pay 0.01%+12% VAT on the proposed
investment.
·
For Section 16 approvals, you will need to pay US $175.00+12% VAT.
·
Section 16 applications must also include the following:
·
Draft articles of association of the company.
a)
A statement of the names of the proposed shareholders and the number of
shares held by each of them, signed by the applicant.
b)
A statement of the names and addresses of the proposed directors, signed
by the applicant, and the inward money and bank evidence of the proposed
investors.
c) If the application is sent by a representative of the proposed new shareholders, they must submit a copy of the letter of authority to act on their behalf This will also indicate the individual, foreign equity contribution of each foreign collaborator.
d) Once you apply, the BOI's Project Screening Committee will evaluate your application and approve it in principle and subject to conditions, including environmental/engineering clearance. Provides you with approval, including approval from the BOI/zonal land allotment committee.
e)
After this approval, you are issued a business operation approval letter
from the BOI’s appraisal department. At this stage, a project officer will also
be assigned to you to assist you with the next steps.
Phase 2 – Company Incorporation and Formal Approval
Once you receive the Business Operation Approval Letter, you can proceed to register your company in Sri Lanka. For more information on registering your company as a Private Limited Company in Sri Lanka, you should check out this
·
.Business Registration in Sr
Lanka – The Definitive Guide or Online Company Registration
In Sri Lanka – A Step By Step Guide
At this stage, you will need to obtain the
following approvals.
a)
Project operation (Preliminary approval of project operation,
environmental clearance, site clearance, preliminary approval for obtaining raw
materials, provisions of certificate of origin, import/export license.
b)
Site approval through the Engineering Approvals Department of BOI,
including the environmental clearance process of the Department of Environment.
c)
Once those permissions are obtained, you will be given a formal approval
letter.
d)
Following the formal approval letter, you will need to obtain
preliminary planning permission for the building and collect a draft contract.
e)
Following the formal approval letter, you will need to obtain
preliminary planning permission for the building and collect a draft contract.
f)
Once you have done everything, a contract will be signed between you and
the BOI, which will also set the implementation period.
Once the
contract is signed, you will need to complete the following processes
g)
Set up an inward investment account with a bank's foreign currency unit
h) . Registration for VAT/TIN (Inland Revenue Department)
i) Development Permits (Building Approvals) Utilities –Electricity (Ceylon Electricity Board), -Water (National Water Supply and Drainage Board), -Telecommunication, (Ceylon Telecommunications/Private Company)
j)
Certificate of Conformity (COC)
k)
Import Export Registration (SL Customs)
l)
Recommendation for work permit and residence visa (Board of Investments
–BOI)
m) Obtain a work permit and residence visa
(Ministry of Defense & Department of Immigration and Emigration)
n)
Import (Duty-Free Goods)/ Export –BOI Approval (Investment Appraisal
Department/Engineering Department)
o)
Registration (Investor Services Department)
p)
Certificate of Conformity (COC) Environmental Protection License (EPL)
q)
Once you have completed the above processes and received approvals, you
can commence business operations in Sri Lanka.
·
What are the fees charged by BOI Sri Lanka?
·
There are three main types of fees that you have to pay to BOI Sri
Lanka. In addition to this, you also have to pay VAT. These can be paid in
rupees at the prevailing exchange rate.
·
Application/Contract Processing Fees
Annual fee
Environmental protection license fees
Investment sectors
1.Apparel
2 Auto Components
3. Electrical & Electronic
4. Food Processing
5. Information Technology
6. Logistics
7. Pharmaceuticals
8. Tourism & Leisure
Why invest in Sri Lanka?
01.Easy
access to international travel
· Combined with the country's strategic location at the crossroads of major maritime trade routes connecting South Asia, the Far East, European and American countries Sri Lanka's proximity to the Indian subcontinent, a gateway to a market of 1.9 billion people in South Asia, presents a valuable opportunity for manufacturers pursuing international expansion.
02.A vibrant talent pool
· Sri Lanka has a multi-dimensional and versatile workforce that meets your company's every need at competitive prices. Sri Lankan workers are globally appreciated for their ability to handle precision manufacturing and their high training capacity to execute complex processes and operations.
· Introduce vocational training programs to meet future demand in emerging industry sectors such as information and communication technology, hospitality and tourism, light engineering and automotive manufacturing At the same time, the country is prioritizing “labor sustainability” by improving both the national education system and access to education.
03.Best place to live
·
Sri Lanka, a country of many facets, offers a variety of experiences,
cultures and destinations for those who enjoy diversity and multiplicityThe country's vast beaches, mountains,
rainforests, and cosmopolitan cities with no shortage of restaurants and cafes,
along with an abundance of nightlife, theater, and art experiences. Making Sri Lanka an experience of choice for everyone
· . There is also a wide selection of quality international educational institutions and state-of-the-art private hospitals and healthcare facilities that make Sri Lanka a truly great place to live and work for you and your family.
04. Rapidly developing infrastructure
· Sri Lanka has experienced significant improvements in available infrastructure, which has been recognized as a national priority by successive governments. This includes an ambitious program to develop and fully upgrade ports around the island, international airports, roads in Colombo city and highways connecting to the rest of the country, and electricity and telecommunications facilities.
05.Access
to key markets
·
Sri Lanka's strategic location offers excellent opportunities to enter
into free trade and partnership agreements with many of Asia's trading powers.
·
Access to key markets
·
Sri Lanka's strategic location offers excellent opportunities to enter
into free trade and partnership agreements with many of Asia's trading powers.
·
India-Sri Lanka Free Trade Agreement (ISFTA) of 2000
·
Market access: 4,228 tariff lines (6-digit level) (number of goods with
zero tariff)
Population: 1.4 billion
·
Pakistan – Sri Lanka Free Trade Agreement (PSFTA) 2005
·
Market Access: 4,676 tariff lines (6-digit level) (number of goods with
zero tariff)
•
Population: 228 million
2000 Singapore – Sri Lanka Free Trade Agreement (SSLFTA)
·
Market access: Provides access to investments and services beyond trade
in goods (number of goods with zero tax)
·
Population: 5.9 million
EU GSP+
•
Market access (number of goods with zero tax)
•
6,400 tariff lines (8-digit level)
•
Population 445 million
USA
GSP+
· Market access (number of goods with zero tax)
· 3,500 tariff lines (8-digit level)
· Population 328 million
· These four markets together offer the
opportunity to reach over 2 billion people when establishing your company in
Sri Lanka.
· Preferential market access to two major regional
areas under the South Asian Free Trade Area (SAFTA) and the Asia-Pacific Trade
Agreement (APTA) is an added advantage for a company based in Sri Lanka.
06.Avoidance of double taxation
·
Agreements for the avoidance of double taxation
·
Relief from double taxation for foreign investors;
Sri Lanka
has entered into double taxation avoidance agreements with 45 countries to
avoid legal double taxation and financial evasion in international trade (or
transactions).
Sri Lanka has entered into double taxation avoidance agreements with 45 countries to avoid legal double taxation and financial evasion in international trade (or transactions).
7.Investment protection
· Bilateral investment promotion and protection agreements
·
Sri Lanka has so far entered into 26 bilateral investment promotion and
protection agreements (PITAs), which provide protection for foreign investments
into the country.
· Sri Lanka is developing its own model BIT with a view to meeting the requirements of incorporating aspects of sustainable development principles in attracting foreign investments.
· Sri Lanka has so far entered into 26 Bilateral Investment Promotion and Protection Agreements (BIPs), It provides protection for foreign investments into the country. Sri Lanka is developing its model BIT with a view to meeting the requirements of incorporating aspects of sustainable development policies in attracting foreign investments.
Departments
01.Clothing
·
By leveraging creativity and expertise in design, R&D and
innovation, the Sri Lankan apparel industry has shown steady growth over the
past three decades.
· The country's premier export sector has evolved from a low-wage driven cost-competitive model to providing cutting-edge solutions to the industry's most complex demands from the world's leading brands.
Priority areas for investmen
·
Intimate wear
·
Casual wear
·
Active wear
· Wearable tech
· Smart Textiles. Digital coloration. Flexible electronics. Adaptive compression.
·
Wearable deployment systems
·
Mobile integration
Flexible electronics Adaptive
compression
Mobile integration
 |
|||
International Brands
Garment export 2013 – 2021
Key Market 2022 Apparel Sector
1. Auto parts (Auto Components)
· Sri Lanka offers an attractive investment opportunity for auto component manufacturers to engage in global value chains.
· This sector is based in the US, Germany, France, UK, Australia, Canada, Sweden, Netherlands, Japan and India to produce clusters Exports industry-related wire harnesses, sensors, precision axles, truck trailers, seat belts, seats, and rubber components.
Automotive parts manufacturing in Sri Lanka
· Batteries, Radiators, Cables Seats
·
Sensors, Airbags,
Seat Belts, Wire Harness
·
Clutch
Systems, Suspension Components, HVAC
Systems, Center Consoles
·
Exhausts
Systems, Oil Filters, Air Filters, Head
Lights
·
Truck Trailers,
Truck Bodies, Bowsers Tractor Trailers
·
Dash Board
Systems, Bumpers, Body Interior Panels, Precision Moulds
·
Steering Racks
including Conversion Kits
·
Rubber Components
Priority areas of investment in the auto parts
sector
·
Wiper blades
·
Clutches and
parts
·
Gear boxes
·
Suspension
systems (Including shock absorbers)
·
Safety airbags
with inflator system
·
Safety seat belts
·
Electrical
lighting or signal equipment
·
Steering wheels
·
Drive-axles with
differential
Export of automotive parts (2016 – 2020)
·
2016-198 million usd
·
2017-217million usd
·
2018-261million usd
·
2019-247million usd
·
2020-199million usd
Export of rubber parts and automotive component (2016 – 2020)
Rubber parts Auto parts
2016-
2016-
2017-
2017-
2018-
2018-
2019-
2019-
2020-
2020-
Top 10 Export Destinations for Rubber Parts and
Automotive Components – 2020
2.
Electrical & Electronics
· South Asian region for electricity and electronics production Being a hot spot, Sri Lanka aims to leverage its access to key regional markets and trade segments as a growing manufacturing destination.
· With this sector experiencing rapid growth globally, young and tech-savvy employees, air and sea connectivity with specialized training Making Sri Lanka an ideal choice for manufacturers looking to expand their global footprint.
Food processing
The industry has advanced from the basics of security, packaging and transportation to emerging products and technologies . By expanding its scope to new products such as ready meals, beverages, processed and frozen fruits and vegetable products, seafood and meat products , The sector seeks investment in post-harvest infrastructure such as cold storage facilities and packaging.
· Potential areas for investment
· Fruits and vegetables (canned, frozen, juices,
pre-cut and ready-made salads, dried and dehydrated)
· Aquaculture
· Value-added coconut products
· Value-added spices
· Confectionery and bakery products
03.Information Technology
· ICT is recognized as a driving sector in Sri Lanka's National Export Strategy, and as a growing player in the knowledge services sector, it has gained global recognition for providing innovative IT solutions The island is steadily transforming itself into a preferred ICT hub with a highly skilled talent pool, offering a wide range of services.
3. Logistics
· Sri Lanka is a well-established logistics hub in South Asia, enjoying a prominent position amidst major trade routes, while serving as a gateway to the Indian subcontinent. The island is an important transshipment hub in the region where many shipping companies consolidate and align cargo. Entrepot trading, off-shore trading, front-end services and HQ operations The country offers investment opportunities in multiple verticals of the logistics and supply chain sector ranging from
Priority
areas for investment
· Logistic Services (Secure
Warehousing/Multi-Country Consolidation)
· Transportation and Distribution
· Freight Forwarding
Medicine and Pharmacy
· The pharmaceutical industry has been identified
as a complete export vertical for its import substitution potential and
subsequent growth.
Local pharmaceutical expenditure
is valued at USD 750 million, with a five-year compound annual growth rate
(CAGR) of 4.1%. Currently, 85% of pharmaceutical requirements are imported,
with 15% of demand coming from local manufacturers.
Possible measures for investments
·
Pharmaceuticals, medicinal chemicals and botanical products
manufacturing facilities
·
Development of antibiotics
·
Production of antibiotics
·
Development of other products (chemicals/plant extracts)
·
Production of other products (chemicals/plant extracts)
·
Production of three main types of
radio-drugs commonly used in cancer treatment (I-131, TC-99, F-18)
·
Cosmetics manufacturing
·
Ayurvedic medicines manufacturing
·
Medical devices manufacturing or assembling
Related ancillary facilities
· R&D facilities including biotechnology
research and manufacturing
· Laboratory testing facilities
Import of medical and pharmaceutical products (2010
– 2020) Volume (MT’000) metric ton
Import of Medical and Pharmaceutical Products (2010
– 2020) Value (USD Mn) million
Medical devices
· Medical devices ranging from common medical supplies like latex gloves and syringes to advanced imaging tools and implantable devices The global market is expected to reach US$ 409.5 billion with a CAGR of 4.5% by 2030. This growth is mainly driven by global healthcare spending, technological advancements, and the increase in chronic diseases.
· ASEAN medical device market growth is heavily influenced by its growing population, rapidly aging population, and strong economic growth It is expected to reach US$8.5 billion by 2020 with a CAGR of 10%. Considering this potential, a significant number of global medical device manufacturers are actively engaging local healthcare institutions and other key stakeholders. have initiated expansion plans in this market.
· The growing population and the public sector-led healthcare establishment facing strong competition from the dynamic private sector make it a good idea to establish operations in a country with favorable market and logistical access to Asia. • Sri Lanka is an ideal location for manufacturers looking to supply the growing local market. and Europe
Major markets
Tourism & Leisure
· Blessed with natural and cultural gifts across the island, Sri Lanka is home to a rich and diverse tourism and leisure sector that is the third largest foreign exchange earner in the economy.
Accordingly, the government has positioned tourism as a central pillar of the economy, which, in the wake of increasing tourist arrivals, has become a world-class sector among the establishes-sectors. It is poised for a resurgence, focusing on investments and new offerings that deliver visitor experiences.
·
Potential areas for investment
·
Tourism accommodation &
services (hotels, transit accommodation, resorts, villas, high-end restaurants,
convention centres, MICE tourism, wellness tourism)
·
Leisure and entertainment (golf courses, amusement parks, theme parks,
tourist attractions
·
Shopping malls, eco-lodges,
camping, whale and dolphin watching, water sports)
·
Adventure and ecotourism (adventure parks)
·
Transportation (boat marinas, coastal ferry services, cruise lines)
urist arrivals (Mn) (2011 – March 2023)
Tourist arrivals by purpose of visit, December 2022
Job Sharing in Tourism Sector -2021
SLTDA Registered Hostels, (2019-2022
Total direct employment (2019-2022)
Ø Ready to invest
01.Lands for development
No comments