Sri Lanka’s Ministry of Finance has issued a Regulation under the Strategic Development Projects Act, setting eligibility criteria and tax incentives for projects in infrastructure, manufacturing, agriculture, education, and technology. Qualified projects can benefit from corporate tax holidays, import duty exemptions, and other levies during the initial implementation period.

Sri Lanka’s Ministry of Finance issued a Regulation under the Strategic Development Projects Act, No. 14 of 2008, published in Gazette No. 2474/66 on 8 February 2026, setting out the conditions for designating a project as a Strategic Development Project (SDP) and specifies the tax concessions that apply.

The official notification, issued by the Minister of Finance, details the eligibility requirements and financial incentives available under the Act. Projects are categorised by industry and scale of investment, focusing on infrastructure, manufacturing, agriculture, education, technology, and ICT sectors.

Eligibility is based on total capital investment and the ability to generate local employment.

Projects meeting these criteria qualify for corporate income tax holidays and exemptions on import duties and other levies during the initial setup phase.

Personal vehicles are excluded from these benefits, and standard taxation resumes once the incentive period ends.

Eligibility categories and sectors

The Regulation divides projects into three main categories:

  • Category A: Infrastructure, Services & Utilities, and Tourism & Leisure (excluding casinos, betting, and gaming)
  • Category B: Manufacturing
  • Category C: Agriculture, Educational & Technological Establishments, and Information Communication Technology (ICT)

Investment and tax holiday criteria

Corporate income tax holidays are granted according to investment size and local job creation:

Category Investment (USD Million) Minimum Local Jobs Tax Holiday (Years)
A 50–150 100 6
A 150–300 100 8
A Over 300 100 10
B 50–100 250 5
B 100–150 250 8
B Over 150 250 10
C 50–100 50 5
C 100–150 50 8
C Over 150 50 10

Specific tax exemptions

During the project implementation period, projects are exempt from the following levies for importation of capital goods and construction materials:

  • CID: Customs Import Duty
  • VAT: Value Added Tax
  • PAL: Ports and Airports Development Levy
  • CESS: Export Development Act levy

Key rules and definitions

  • Commencement: The tax holiday starts from the date commercial operations begin.
  • Exclusions: Importation of motor vehicles for personal or travel use is not exempt.
  • Implementation Period: Defined as the time between signing the agreement with the Board of Investment (BOI) and certified start of commercial operations.
  • Post-Exemption: Once the tax holiday ends, standard tax laws apply.

This framework provides a structured guide for investors looking to participate in large-scale economic initiatives in Sri Lanka, offering targeted financial incentives while ensuring compliance with existing tax legislation.