The Advocata Institute has warned that tax exemptions for residential real estate developers in Colombo Port City create an unequal tax regime for real estate businesses elsewhere in Sri Lanka.
Regulations issued under the Port City framework in Gazette No. 2343/60 of 4 August 2023 and Gazette No. 2454/62 of 20 September 2025 provide the incentives, the think tank said. All four companies registered with the Port City Commission as real estate developers are classified as Primary Businesses of Strategic Importance.
Prime Melwa Port City (Pvt) Ltd and Home Lands Port City (Pvt) Ltd receive 10-year exemptions from corporate income tax, and Marina Hotel Holdings (Pvt) Ltd receives an 8-year exemption. ICC Port City (Pvt) Ltd is exempt from income, profit, dividend and withholding taxes for 25 years, followed by a 50 percent cut in the corporate tax rate for 10 years.
Advocata said there appears to be limited evidence that the residential projects generate economy-wide benefits that would justify preferential treatment. It said the government should address governance and regulatory bottlenecks that constrain investment instead of adding exemptions.
