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Obtaining a BOI Approval

The organization that is concerned with this is the Board of Investment (BOI). They have two web addresses www.boi.lk & www.investsrilanka.com

 As an investor, you have two options to locate your project within Sri Lanka:

  1. Locate your project within a BOI administered Export Processing Zone or Industrial Park (with required infrastructure facilities) on long-term lease basis. These zones/parks are more suitable for industrial manufacturing and processing businesses.
  2. Locate your project outside zones
    • Purchase a privately owned land on outright purchase or lease basis.
    • There are government owned lands available for long term lease under different government agencies. Acquisition of government lands involve a comparatively longer process and valuation is based on current market price.

Board of Investment of Sri Lanka is empowered to approve projects under two categories.

Projects approved under Section 16

Under section 16 of BOI Law, where the entry of foreign investment is permitted without any fiscal concessions. These projects are governed under Normal laws of the country and are subjected to Inland Revenue Laws, Custom Laws and exchange control regulations.These approvals are granted;

  • only to facilitate the entry of foreign investment
  • to setting up of a new company with foreign shareholding or
  • for the purpose of transferring or issuance of new shares in an existing non-BOI company to foreign investors

 At present the minimum investment requirement to qualify for the section 16 projects is US$ 250,000. This can be either 100% foreign investment or a joint venture investment with a local collaboration.

Foreigner has to remit a minimum of US$ 1 Mn if they are to undertake trading activity

The proposed foreign investment should be effected from funds remitted through a Securities Investment Account (SIA) as indicated in the Gazette Extraordinary No.1232/14 of 19th April 2002 published by the Controller of Exchange. 

Projects approved under Section 17

Under Sec.17 of the BOI Law, it is empowered to approve projects and enter into agreements with enterprises and to grant exemptions from laws such as Inland Revenue, Exchange Control and Customs, subject to fulfillment of the investment threshold or any other specified requirement.

Various exemptions under Inland Revenue Law, Port & Airport Development levy Act, Value Added Tax Act and Strategic Development Project Act are available for BOI Approved Companies. In addition, BOI provides duty free facilitation and exchange control exemptions for projects approved under BOI Law.

Companies signing an agreement with the Board of Investment of Sri Lanka are entitled to obtain duty free facilities under Sec. 17 of BOI Law No. 4 of 1978. Companies that export more than 90% of goods produced (60% for apparel & Ceramic) or services (with 70% turnover in convertible foreign currency), are entitled to be free of Customs Duty on capital goods and raw materials. Non-export oriented companies are entitled to import project related capital goods free of Customs Duty, during the project implementation period.

Prior to signing an agreement, the company should forward the list of items that it requires to set up and operate the project. These lists will be evaluated and approved by the Sector groups.

Parts I, IA, II, III, IV V & VI of the Exchange Control Act are exempted for these companies and they are entitled to open and operate Foreign Currency Banking Unit (FCBU) account in any commercial bank in Sri Lanka.

Steps

1. Obtain an application from BOI.

Applicable fee is as follows:

− Overseas : Bank draft or cheques for US$ 200 + VAT

− Sri Lanka : Bank draft or cheques or cash equivalent of US$ 200 + VAT in SL

The application comprises of two parts : Investment Approval and Site Approval.

2. Submit completed application to the receiving officer of the Investment Appraisal Department of the BOI.

3. Approval will be granted after appraising the project proposal.

4. After Approval , BOI will entered in to an agreement with you. Agreement signing process will take one month.

For this matter you need to provide some documentary requirements listed below and to pay Agreement Processing Fee.

i. Company Profile

ii. Feasibility report of the project

iii. Current Annual Report

iv. Bank references etc.