Port City Colombo, a world-class offshore Special Economic Zone will be designated in foreign currency and devoted to the export of specialized services will be the first of its kind in the South Asian Region. Port City Colombo, the development, will be one of the most livable cities in the region, built on sustainable values, a healthy environment, and future-ready infrastructure to improve living convenience.
The Colombo Port City Economic Commission Act, No. 11 of 2021, which has a cutting-edge legal structure and appealing regulations aimed at making conducting business easier, was adopted by the Sri Lankan government in May 2021. The boundaries listed in Schedule 1 of the Colombo Port City Economic Commission Act make up the “Area of Authority” (AOA) of the Port City Colombo.
From the date of commencement of the Port City Act (i.e., 27 May 2021), all land comprising the AOA has been vested in the ‘Colombo Port City Economic Commission’ (Commission) by way of a ‘Land Grant’ issued by the President of Sri Lanka (President) under the State Lands Ordinance (Chapter 454). Within the AOA, the Project Company has been given a (99-year) lease. When the city is fully developed by 2040, Port City Colombo is estimated to have some 6.3Mn m2 of build-up space with a new city population of 273,000, anticipated to be expatriates in the majority.
Those who fall within the criteria of operating its business within the Port City Colombo can take advantage of lucrative incentives offered by Colombo Port City Special Economic Zone, the region’s future financial hub and the entry point to South Asia and the rest of the world.
Authorized Persons operating within Port City refers to those who have received official approval and legal recognition to carry out specific operations within the Port City special economic zone. According to the rules and regulations established by the Colombo Port City Economic Commission overseeing the Port City, certain authorized persons are permitted to engage in particular commercial operations, trade, and other activities.
Being an “authorized person” signifies that the individual or entity has met the necessary requirements, complied with relevant regulations, and has been granted the necessary licenses or permits to operate within the Port City. These authorized persons could include businesses, investors, traders, service providers, and professionals who are permitted to carry out their activities within the designated economic zone.
The concept of authorized persons is crucial in maintaining the organized and regulated functioning of the Port City, ensuring that all activities conducted within its boundaries adhere to the established legal and operational frameworks.
The Act of 2021 provides exemptions from certain laws of the land – subject to specified conditions. These acts include the Foreign Exchange Control Act; Inland Revenue Act etc. (please refer the schedule to the Act). Other than the exemptions, all laws of the land apply. The Port City regulatory framework has been designed to address the challenges that businesses and investors face not just in Sri Lanka but in the region as well. Therefore the framework has incorporated regulatory best-practices to ensure optimal levels of ease of doing business.
The Commission has identified Real Estate Investment, Real Estate Development and Real Estate Operation as its primary investors. The qualifying criteria for the above sectors will be minimum investment of USD 100Mn per land plot or a minimum investment of USD 25Mn for the marina or social infrastructure land plots.
Primary investors will enjoy zero per cent Corporate Income Tax Holidays for 25 years together with a concessionary Tax Rate of 50% of the prevailing tax rate for a further period of 10 years following the end of 25 years. The commission offers another option of Enhanced Capital Allowances of 300% of investment in depreciable assets as an alternative to tax holiday and concessionary rate.
The identified secondary Investors are as follows.
• Global and regional economic activity in international trade
• Corporate headquarters operations
• Offshore banking and finance
• Innovation, Entrepreneurship
• Sustainable development
• Generation of employment opportunities
• Shipping logistics operations, Regional distribution operations
• Business process outsourcing, Information technology
• Tourism and other ancillary services, Entertainment
• Urban amenity operations in the settlement of a residential community
Qualifying Criteria for the investors of the second category would be
• Company having an annual global revenue of more than USD 50Mn
• Minimum of 100 employees within 5 years from commencement
• Startup business with a valuation of at least USD 500,000 within 05 years of being licensed under the CPCEC Act.
• Contribute to the economy and social development in Sri Lanka for creating an international financial center.
Approved Authorized Persons will also enjoy an exemption from the following Indirect Taxes on initial investment during the implementation period.
• 0% sales taxes
• 0 taxes on imported material, etc
• Other border tariffs
Registered and approved Authorized Persons’ businesses can operate outside the area of authority of Colombo Port City for a period of up to 5 years in designated locations and enjoy the benefits granted until the commercial office spaces vertical developments are ready for occupancy.
Operating a business within the vibrant realm of Port City Colombo offers an exceptional gateway to unleash entrepreneurial aspirations. With its strategic location, modern infrastructure, and a beneficial business environment, the Port City presents a unique opportunity for development and success. By capitalizing on its Specialized Economic Zone, companies can tap into a diverse market, harness the potential of regional connections, and elevate the businesses to new heights. Port City Colombo is where the potential investors can embrace the dynamic possibilities and embark on a journey of innovation, collaboration, and prosperity in this thriving hub of commerce.
