Sri Lanka: Proposed changes to tax holidays, exemptions, and concessions for strategic investments

Legislation to limit tax holidays and strengthen oversight for strategic development projects

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november 13, 2025

Proposed legislation to amend the Strategic Development Projects Act, No. 14 of 2008, as amended by Act No. 12 of 2011, aims to enhance transparency, accountability, and fiscal discipline in granting tax holidays, exemptions, and concessions to strategic investments.

Proposals include:

  • Reducing the maximum tax holiday period from 25 years to 10 years
  • Establishing a structured identification procedure for strategic development projects (SDPs)
  • Requiring the Ministry of Finance to publish an annual report on tax expenditures related to all SDPs
  • Introducing ex-post monitoring and sanctions for non-compliance with approved key performance indicators
  • Providing transitional provisions for existing tax benefits granted before the amendment

Read a November 2025 report prepared by the KPMG member firm in Sri Lanka

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