New tax concessions for integrated resorts

20 February 2014 07:52 am Views - 9414

No mention of specific tax exemptions for gaming activities

The Cabinet of Ministers of Sri Lanka once again appears to have approved investment concessions for three super luxury integrated resort projects, the recent gazette notification published showed.

“The approval of Cabinet of Ministers has been obtained in terms of Sub-section (3) of Section 3 to declare the project as a Strategic Development Project and such a project attracts strategic importance and the national interest of attracts highest priority in Economic Development as per the Development Strategy of the Government,” the government gazette said.

Accordingly, notifications with regard to Lake Leisure Holdings (Private) Limited, connected to Australian gaming tycoon James Packer, Waterfront Properties (Private) Limited of John Keells Holdings and The Queensbury Leisure Limited of local businessman Dhammika Perera have been offered 10-year income tax breaks and import duty concessions on material related to the projects.

However, quite conspicuously, the term ‘gaming’ has been excluded from the descriptions of the three integrated hotel projects and instead ‘associated facil-

three gazette ities’ has been included.

Apart from the associated facilities, the resorts are said to have luxury rooms, high-end shopping malls and high-quality residencies and office spaces.

The gazette said the imposition of income tax shall not apply on the profits of the project company that are generated from the activities of the project, including sale, lease rent proceeds of apartments, office and service spaces, room charges and rental income from all tenants for a period of 10 years.

 However, according to the wording of the gazette, no tax exemption has been offered for the profit generated from gaming activities.Meanwhile, immediately after the 10-year tax exemptions, Packer’s Lake Leisure has been offered a 12-year partial income tax exception on profit and income, while John Keells’ Waterfront with a 15-year partial tax exemption. Dhammika’s The Queensbury has also been offered a 12-year partial income tax exemption.

When tax breaks for Lake Leisure and Waterfront were announced earlier, they were met with severe objection by various quarters and as a result, the government had to pull them back.

However, Sri Lanka’s Parliament had already lifted the value-added tax from the gaming and limited gaming revenuebased taxes to only 5 percent, before the projects were approved.