President Anura Kumara Dissanayake, in his capacity as Minister of Finance, Planning and Economic Development, has granted a sweeping package of tax concessions to the Colombo Port City through a series of Gazette Notifications issued on July 14, 2025. The move, published under Gazette Nos. 2445/2, 2445/3, 2445/4, and 2445/5, offers extensive fiscal exemptions to key entities operating within the Port City, positioning it as a major investment and development hub.
Under the provisions of the Inland Revenue Act, the Port City has been granted tax exemptions for a period of 35 years. These exemptions cover all income, profits, and distributed dividends, as well as withholding tax and import taxes. The exemption period will begin on July 14, 2025, and continue until July 13, 2060, effectively removing significant tax burdens for companies conducting operations within the Port City during that timeframe.
In addition to the long-term income tax relief, four private companies have been granted 25-year exemptions from a wide range of other fiscal statutes and levies. These include the Value Added Tax (VAT), the Finance Act, excise duty, customs duty, the Port and Airport Development Tax (commonly known as PAL tax), the Export Development Act, the Workers’ Protection Termination Act, and the Foreign Exchange Act. These exemptions will be effective from July 14, 2025, and will remain in force until July 13, 2050.
The companies named in the gazette as beneficiaries of these exemptions are Ceylon Real Estate Holdings (Private) Limited, Clothespin Management and Development (Private) Limited, IFC Colombo (Private) Limited, and ICC Port City (Private) Limited. All four companies are involved in major development and infrastructure projects within the Colombo Port City.
The government’s announcement underscores its commitment to transforming the Colombo Port City into a global economic and financial center. By offering long-term tax holidays and regulatory relief, the administration aims to attract significant foreign direct investment and accelerate economic growth. The full implications of these exemptions—both in terms of investment inflows and public revenue impact—remain to be seen as implementation begins in mid-July 2025.
