IPS Publications

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Incentivizing Foreign Investment in Sri Lanka and the Role of Tax Incentives
(Institute of Policy Studies of Sri Lanka, 2013-04) Wijesinha, Anushka; Ekanayake, Raveen; Mahendra, Gajen
While this paper does acknowledge that tax incentives are not the only factor in determining the foreign investment attractiveness of the country, that tax incentives violate the equity principle of taxation, that the evidence supporting the effectiveness of tax incentives is contentious, and are a drain on the country's exchequer, it also acknowledges that Sri Lanka would need to maintain some form of tax incentives regime to remain competitive in attracting good quality FDI. The key argument of this paper is that this tax incentives regime must be designed, implemented, and monitored in a smarter and more cost-effective way so that the impact on revenue is minimized and economic policy objectives can be realized.