Seeking investments beyond tax holidays

THE latest Treasury circular once again turns to a familiar policy lever, the tax holiday.

- 

Under the new scheme, investors in tourism, manufacturing, agriculture and educational technologies are offered generous tax breaks ranging from six to ten years. The minimum investment thresholds are substantial from $ 50 million to $ 300 million, with job creation requirements between 100 and 250 positions. Tourism and leisure projects must bring in at least $ 300 million to qualify for up to a decade of tax relief.

On paper, this sounds bold and ambitious. In practice, it risks repeating an old mistake. Tax holidays have long been Sri Lanka's preferred instrument for attracting foreign direct investment. They are politically attractive. They allow governments to announce large headline figures, promising mega projects and thousands of jobs. But the fundamental question remains whether these tax holidays are the best way to attract serious, long-term, high-quality investments?