Sri Lanka's tropical climate is ideal for large-scale export-oriented investments in areas such as foliage, cut flowers and exotic fruits and vegetables.East-Asia also offers an expanding and adjacent market for shellfish and other products of
mariculture and aquaculture. In addition to primary production, Sri Lanka also requires processing and storage facilities to help exports.
Companies involved in the cultivation and/or processing of non plantation agricultural produce (excluding planting and primary processing of tea, rubber and coconut), research on high quality seeds and seed production, cultivation under poly-tunnels and drip tunnels using advanced technology, development of marketing infrastructure such as storage facilities for agricultural produce and dairy and livestock development would be entitled to generous tax holidays and other concessions.
Any company engaged in the above activities and investing a minimum Rs 10 mn and employing 20 persons shall be entitled to a 10 year tax holiday. Note that in the case of agriculture, the minimum area under cultivation should be 5 hectares. If the total investment is between Rs 2.5 mn and Rs 10 mn the tax holiday period is 5 years. In addition, companies which qualify for tax holidays as mentioned above would be entitled to import all project related imports duty free. For companies exporting less than 50% the duty exemption on plant, machinery and other project related equipment shall apply during the project establishment period. Export oriented companies would enjoy duty exemption on raw material imported for the purpose of export processing.
Many items required for agricultural activity have been exempt from duty under the Customs Ordinance and are thus available to companies regardless of export orientation. These include seeds, green houses, poly-tunnels, drip irrigation systems, selected agricultural machinery etc.