- sashimaalTop contributor
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Join date : 2014-02-28
The government has granted an income tax holiday for 10 years and a tax exemption for six years to the investing company named One Colombo Project (Private) Ltd, according to a gazette tabled in parliament yesterday.
Chief Government Whip and Parliamentary Affairs and Mass Media Minister Gayantha Karunathilake presented the gazette on behalf of Minister of Development Strategies and International Trade Malik Samarawickrama.
According to the gazette, the One Colombo Project (OCP) shall implement and commence commercial operations in the said area within eight (08) years from the date of the project agreement signed between the Board of Investment of Sri Lanka and the OCP.
The provisions of the Inland Revenue Act No 10 of 2006 relating to the imposition of income tax (under Corporate Income Tax) shall not apply for a period of ten years to the profit of the project other than the sale of apartments and only a tax exemption of period of six years for the income generated through the sale of apartments.
"Dividends distributed to the shareholders out of the exempted profit shall be exempted from the income tax during the said tax exemption period of ten years or six years as the case may be and one year after," the gazette says.
It says: "The company shall be exempted from the payment of Withholding Tax on the following: (a) on the interest on foreign loans taken for capital expenditure and technical fees paid to consultants ; (b) on management fees and royalty payments provided however the total of such charges does not exceed three per cent of the gross operating revenue; (c) on marketing fees provided however the total of such fees does not exceed 1.5 percent of the gross operating revenue; and (d) on incentive management fees provided however the total of such fees does not exceed 10 percent of the gross operating profit.
"The expatriate staff of the project company shall be exempted from the payment of Pay As You Earn tax subject to the restriction that this concession shall apply subject to the maximum number of 15 employees at any given time.
"All imports of project related goods and local purchases of project related goods or services required for the implementation of the projects as approved by the BOI, shall be exempted from the payment of VAT for eight years.
"The project company shall be exempted from the payment and charge of Ports and Airports Development Levy (PAL) for eight years.
The Project company shall be exempted from Construction Industry Guarantee Fund Levy.
The company has also been given an exemption of paying Customs duty on importation of project related items for eight years.
UPFA MP Bandula Gunawardena called on the Chair and asked the Speaker to give a debate on the matter.
- Future123Active Member
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Join date : 2014-04-09
Why this tax holiday of 10 years for construction of apartments as the builders make huge profits. We can justify giving exemptions for manufacturing and export companies but for apartment construction is very fishy.
Surely, this is yet another massive fraud by Yahapalanaya politicians.
- sashimaalTop contributor
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Join date : 2014-02-28
Tata’s unusual deal with UDA; free 8-acre land with trade-offs
By Bandula Sirimanna
Colombo township project takes off
In an unconventional deal, India’s Tata Housing, the real estate arm of the Tata Group and a wholly-owned subsidiary of Tata Sons this week launched a US$ 400 million mixed development project in Slave Island Colombo,
The project is in collaboration with the Urban Development Authority (UDA) as a major township rejuvenation initiative, at the same time resettling shanty dwellers in the area in improved housing units.
The unusual deal is made of an agreement between the UDA and Tata Housing to hand over an 8-acre block of land to the former on a 99-year lease “free of charge” bordering the former Education Department site to the North, Malay Street to the East, Justice Akbar Street to the South and the railway line to the West, officials said. Developments of this nature in the past have normally been on a lease rental basis.
Tata Housing secured the deal without any evaluation because of their high credentials although three more companies had submitted their bids, UDA chairman Nimal Perera said at the ceremonial inauguration of the project.
The Indian company will get the land with no lease payment and in exchange has agreed to bear the full cost of building a fully-fledged housing complex on a 3-acre block of land (in the same property) for displaced residents, he told the Business Times separately.
The land value in the area ranges from Rs. 7 million to Rs. 9 million per perch with the average value being around Rs. 8 million, an official of the Valuation Department who wished to remain anonymous, told the Business Times.
Accordingly the total value of 8 acres is in the region of Rs. 10.3 billion and the minimum value of the 99-year land lease would be around Rs. 5 billion, he added. According to the agreement, the housing complex will house 582 families and 100 shop owners who were displaced by the project. This first stage of the innovative project is to be completed within two years.
The total cost for providing alternate housing/commercial units including rental payments for temporary accommodation of the families is estimated to be about Rs. 5,874 million, a senior official said, adding that the cost of building the housing complex for residents has not been estimated as yet.
The total cost of building the housing complex and for providing the house rental of displaced residents for 30 months in other locations till the completion of the housing complex will be borne by the Indian company, Mr. Perera disclosed.
However both Mr. Perera and TATA Housing chief Brotin Banerjee declined to divulge the total cost as the project is still at the initial stage.
All residents who had lost land and houses will get equal or bigger housing in the new housing complex, Mr. Perera said.
Tata company undertakes mixed development project in Colombo 2
Generous tax concessions granted; FDI of US$ 130 m. of total cost of US$ 430m.
India’s Tata Housing Development Company has become the latest international firm to be given generous tax concessions for a mixed development project it is building at Slave Island, Colombo 2. This includes a ten-year corporate income tax waiver on the profits of the project, other than from the sale of apartments. The exemption for income generated through the sale of apartments is six years. A second gazette in this regard was issued on November 3, following the granting of Cabinet approval for the concessions. It was signed by Investment Promotion Minister Lakshman Yapa Abeywardena. The first gazette was issued in July, under the provisions of the Strategic Development Projects Act.
TATA has incorporated a local company in Sri Lanka named M/s. One-Colombo Project (Private) Limited. It will redevelop an eight acre plot of land in Slave Island. It will build apartments for low-income families on part of the property.
The project, which is an initiative of the Urban Development Authority (UDA), will cost US$429.5 million. US$130 million of this is foreign direct investment. In addition to the corporate income tax concession, dividends distributed to shareholders out of the exempted profit will be exempted from income tax for ten or six years, as the case may be, and one year thereafter.
Waivers of Withholding tax are also afforded in specified cases. The expatriate staff of the project company will be exempt from the pay as you earn (PAYE) tax, subject to restrictions. Several other concessions have been offered, in keeping with the Act.
The Slave Island project was floated by the UDA, partly as a means of resettling thousands of low income families who had been evicted from the area to free up prime property in Colombo. They have been promised better housing. The project will also include residential and commercial buildings, including luxury apartments.
Last month, the UDA issued a statement saying that construction has started on 15,000 housing units for low-income families in different parts of Colombo. The block in Slave Island has been identified as a “priority project” requiring private sector investment, it said.
The gazette that was issued in July said the redevelopment of the said area “will bring significant change in the landscape of Colombo city through higher standard of living associated with better quality of life to the habitants”. It also said the establishment of the mixed development project will contribute to the economic development of the country.
Flashback: Tata officials explain the One Colombo project to the then Defence and Urban Development Secretary Gotabaya Rajapaksa at the ground breaking ceremony held in May last year(2014).
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