Investing in
Port City Colombo

Yes. Both resident and non-resident persons, including companies, partnerships, and foundations incorporated under Sri Lankan or foreign law, may obtain a licence to operate within Port City Colombo with 100% foreign ownership.

The CPCEC is the sole regulatory and facilitation authority for all economic activity within Port City Colombo, established under Act No. 11 of 2021. It functions as a Single Window Investment Facilitator, handling all licences, registrations, work permits, visa facilitation, and approvals.

AW Chambers advises individual investors, developers, and corporate clients on all aspects of Port City matters, including business structuring, CPCEC licensing, property acquisition, due diligence, transactional drafting, and ongoing regulatory compliance.

Both resident and non-resident persons may apply. The Act contemplates natural persons, companies, partnerships, limited partnerships and foundations, whether constituted under Sri Lankan law or under foreign law. Proposed investment values are denominated in a designated foreign currency rather than Sri Lanka Rupees, and the source and route of funding is one of the points on which the Commission’s current requirements should be confirmed at the time of the application rather than assumed from published summaries.

A business obtains a licence from the Colombo Port City Economic Commission (CPCEC), which acts as a single-window facilitator for incorporation, registration, work permits, and approvals. Both resident and non-resident persons may hold 100% ownership of a licensed Port City entity. AW Chambers advises on the structure, the licence application, and ongoing compliance.

No. Registered APs are not required to occupy office space within Port City Colombo. Until commercial premises within the Area of Authority are ready for occupation, APs may operate from designated locations outside the Area.

Port City Colombo is a service-oriented Special Economic Zone, and the businesses licensed to date sit overwhelmingly in services directed at clients outside Sri Lanka. Two statutory points govern the edges. Selling into the domestic Sri Lankan market is not a right: section 37 requires an authorised person to apply to the Commission for authorisation to engage in business in Sri Lanka with a citizen or resident carrying on business outside the Area of Authority, and that application is decided in the national interest and to safeguard the domestic economy, subject to all written laws and regulations. Separately, what any particular licence permits is fixed by the licence itself and by the regulations governing authorised persons engaged in business. Whether a proposed activity — including any with a manufacturing or processing element — falls within what the Commission will license is a question to put before the business plan is written, not after.

An AP licence may be cancelled where the AP: (i) fails to commence business at Port City Colombo within six months of licence issuance; (ii) ceases to conduct business in the permitted place(s) or area(s), or no longer has a legal personality under applicable law; (iii) furnishes false, misleading or inaccurate information or documents to the CPCEC; or (iv) breaches the terms and conditions of the licence as issued by the CPCEC.

An AP that does not renew its licence ceases to be an AP and may no longer engage in business within Port City Colombo. The CPCEC may not, however, formally cancel the licence until three months have passed from publication of the notice of expiry.

The AP must submit a written application for renewal to the CPCEC at least thirty days prior to the expiry of its existing licence.

Following registration, the CPCEC issues a certified copy of the licence, certificate of registration and authorisation, or such other form of approval as is appropriate to the AP's licensed activity.

AP applications are reviewed by the CPCEC at the end of each month. Applicants are contacted following that review, and the CPCEC Public Register is updated accordingly.

Since 2026, very little. New section 27(2a), inserted by the Amendment Act No. 1 of 2026, provides that until a licence and a certificate of registration are issued under sections 26(3) and 26(4), the Commission may charge no fee other than the fee specified in section 27(2) — and it names land use fees expressly among the charges it may not levy. For an applicant whose approval is slow, the cost of waiting is now capped by statute. It is one of the few changes made in 2026 that runs in the investor’s favour, and it is largely absent from published summaries.

The Colombo Port City Economic Commission (CPCEC) grants AP status, acting in its capacity as the Single Window Investment Facilitator for Port City Colombo.

Applicants are typically required to submit: a Certificate of Incorporation; certified copies of the biodata page of the relevant passport(s); a document appointing the authorised signatory; a credible and viable business plan; and such further supporting documents as the CPCEC may request.

Not necessarily. Foreign entities not currently operating in Sri Lanka may register as a foreign business and then apply for AP status. Alternatively, an existing foreign entity may incorporate a new Sri Lankan entity with the Registrar of Companies, register that entity as an Offshore Business Unit, and then apply for AP status.

Registration is made through the CPCEC's online application portal, which guides the applicant through the AP (and, where applicable, BSI) application.

No. There is no prescribed minimum investment for AP status. Any entity that meets the qualifying criteria is eligible for both AP status and, where applicable, BSI designation.

An investor may qualify by either: (i) incorporating a company in Sri Lanka with the Registrar of Companies and obtaining offshore status under the Colombo Port City Economic Commission Act No. 11 of 2021; or (ii) registering an overseas-incorporated company as an offshore company under the same Act. In either case, the CPCEC will issue the AP licence on satisfaction of the applicable requirements.

An Authorised Person is an individual or entity that has been formally designated by the CPCEC and granted the right to carry on specified international business activities within the Colombo Port City Special Economic Zone.

An authorised person deals in designated foreign currency, pays its employees in it, and may repatriate capital and profits; there is no restriction on foreign ownership or on the employment of foreign nationals; the Termination of Employment of Workmen Act is among the enactments in Schedule II from which exemption may be granted; the Commission acts as Single Window Investment Facilitator for licences, registrations and permits; and disputes go to the International Commercial Dispute Resolution Centre, with the courts directed by section 63 to hear Port City civil and commercial matters expeditiously on a day-to-day basis. Two commonly cited advantages need qualifying after the Amendment Act No. 1 of 2026: the income tax exemption on employment income is now confined by section 35 to employees of a person licensed before that section commenced, and for three years only; and visa terms are administrative, the Act reserving the final decision to the Controller of Immigration and Emigration.

A business identified as a Business of Strategic Importance may be granted exemptions, in full or in part, from any of the thirteen enactments in Schedule II to the Act — among them the Inland Revenue Act, the Value Added Tax Act, the Customs Ordinance and the Ports and Airports Development Levy Act. The forty-year ceiling that section 52(7) formerly imposed was repealed by the Amendment Act No. 1 of 2026; the period of validity is now as prescribed, and what prescribes it is Regulations No. 1 of 2025 (Gazette Extraordinary No. 2454/62 of 20 September 2025). The Ministry of Finance may review the period and the exemptions every five years. Employment income is a separate question: section 35, as replaced in 2026, limits the income tax exemption to employees of a person licensed before that section commenced, and then for three years only.

There are two different things here, and conflating them is a common source of disappointment. As a matter of process, no separate form is filed: within the online Authorised Person application, in the business plan section, the applicant indicates that BSI designation is sought and identifies the qualifying criteria it says it satisfies, and vetting runs concurrently with the AP review. As a matter of law, designation is not an administrative approval at all. Section 53 requires the Commission to recommend it, the President or assigned Minister in consultation with the Minister of Finance to inform Cabinet of the rationale, the specific Schedule II exemptions proposed, the commencement and cessation dates as prescribed and the applicant’s name, and an Order to be published in the Gazette within two weeks of Cabinet approval. A licence is therefore not a designation, and an application is not an entitlement.

Neither the criteria nor the periods are in the Act; both are prescribed. The regulations in force are the Colombo Port City (Guidelines on the Grant of Exemptions or Incentives to Businesses of Strategic Importance) Regulations No. 1 of 2025, published in Gazette Extraordinary No. 2454/62 of 20 September 2025, in force for five years from their coming into operation (regulation 8), and confined by regulation 2 to businesses identified on or after that date. Under regulation 3, Primary designation turns on four categories pairing a minimum investment per plot with minimum employment — US$100 million, US$500 million or US$1,000 million with 300 jobs, or US$25 million in Marina or Social Infrastructure plots with 100 — and regulation 4 gives each an income tax holiday of ten, twelve, fifteen or eight years respectively, commencing on expiry of a project implementation period capped at five, six, eight or four years. A Secondary Business of Strategic Importance pays corporate income tax at 7.5% for four years from the commencement of commercial operations — regulation 6. Regulation 7 makes the incentives non-negotiable and non-renewable. Figures of “up to 23 years”, “25 years” or “40 years”, which remain in wide circulation, describe a superseded position. Two further points: since the Amendment Act No. 1 of 2026 the period of validity is whatever is prescribed under section 52(7) rather than capped by it, tax-related exemptions are subject to technical analysis by the Ministry of Finance under section 52(3A), and the Ministry may review the period and the incentives every five years; and the terms that actually bind are those in the Gazette Order made under section 53(3) and embodied in the section 32 agreement. The figures above are taken from the Gazette text; the terms that bind any particular business are those in its own Order and agreement.

A BSI is a business identified by the CPCEC as qualifying for exemptions or incentives within Port City Colombo. Only Authorised Persons may hold BSI status. BSIs are intended to advance social, economic and developmental objectives, and fall into two categories: Primary BSIs (land development investments) and Secondary BSIs (business set-up and operating investments).

Yes. Foreign nationals and non-resident investors are generally permitted to acquire condominium parcels within Port City Colombo. Transactions are typically denominated in a designated foreign currency. The Land (Restrictions on Alienation) Act 2014 and its interaction with Port City regulations should be reviewed with legal counsel before any acquisition.

Yes. Building maintenance and strata management in Colombo are governed principally by the Apartment Ownership Law No. 11 of 1973 (as amended) and the Common Amenities Board Law / Condominium Management Authority Law, which together regulate condominium ownership, common property and management corporations.

The reclaimed area was vested in the Commission by a Presidential Grant issued on 12 August 2021 under section 6 of the State Lands Ordinance (Chapter 454), pursuant to section 65(3) of the Act. Under the Tri-Party Agreement a portion of the marketable land was allocated to the project company on long-term lease in recovery of its reclamation investment, and the balance remains with the Commission. What that means for a particular parcel — who grants the interest, what interest is granted, what is registered against it, and what the developer and condominium documentation actually provide — is a question of title investigation on the parcel in question, and no general answer should be relied on in place of one. AW Chambers carries out that investigation as a matter of course before advising on an acquisition.

Section 39 empowers the Commission to lease Government Marketable Land or Project Company Marketable Land, and to lease or transfer on freehold a condominium parcel standing on such land. The Act itself fixes no lease term: the long leasehold figures quoted in market material derive from the transaction documents and the Tri-Party Agreement rather than from the statute, and the term applicable to a given parcel is whatever that parcel’s documentation provides. End-user acquisitions of condominium parcels are commonly structured as freehold, subject in every case to the Land (Restrictions on Alienation) Act No. 38 of 2014 and to the section 39 conditions. The term, the grantor and the conditions are matters to establish on the documents before commitment.

The Colombo Port City Economic Commission Act provides for an International Commercial Dispute Resolution Centre (ICDRC) within Port City. Disputes between the Commission and authorised persons or residents are resolved through arbitration, consistent with international commercial practice.

The Commission is the single window through which visa, entry permit and work permit applications are made, and it may recommend priority treatment where it considers an application acceptable in the national interest — section 33. The Act itself confers no visa or residency entitlement and fixes no period: it states twice that the decision of the Controller of Immigration and Emigration is final — sections 33(3) and 34. Multi-year terms published by the Commission are administrative rather than statutory, and should be confirmed as current before they are relied on.

The Area of Authority runs on designated foreign currency. Employees of an authorised person are remunerated in a designated foreign currency other than Sri Lanka Rupees — section 35(1) as replaced — and section 36, as amended in 2026, ties conversion of rupee receipts to a designated foreign currency as prescribed under the Foreign Exchange Act No. 12 of 2017. Which currencies are designated is prescribed rather than listed in the Act, so any figure for the number of them is administrative and can change without amendment of the Act; the current list should be confirmed before a treasury structure is built on it. Rupees are not excluded altogether: section 40 allows citizens and residents to pay in rupees for retail facilities and services inside the zone, and section 39 permits rupee transactions in land and condominium parcels with a defined class of buyer.

The honest answer changed in 2026, and material describing an unconditional “investor protection clause” has not caught up. What an investor now has is this. Entitlements granted are embodied in the agreement made under section 32, and section 52(4) requires incentives granted to be written into it — so the agreement, not a brochure, is the instrument to negotiate and to read. Disputes under that agreement go to arbitration before the International Commercial Dispute Resolution Centre under section 62, with enforcement or setting aside under the Arbitration Act No. 11 of 1995, and section 63 directs the courts to hear Port City matters expeditiously on a day-to-day basis. Against that, sections 52A and 52B inserted by the Amendment Act No. 1 of 2026 allow the Commission, where key performance indicators are not met, to issue a notice of non-compliance and thereafter to restrict, suspend or revoke any or all exemptions or impose administrative penalties — subject to a show-cause notice, one month to respond and a right to be heard; and section 52(5A) allows the Ministry of Finance to review the tax holiday period and the incentives every five years. Incentives are now conditional and reviewable. Anyone modelling on the basis that they cannot be withdrawn is modelling the pre-2026 Act.

Escrow and project account arrangements are a matter of banking documentation rather than of the Act, and the terms, permitted uses and operational restrictions are set by the bank in accordance with the foreign exchange and banking regulation applicable to it. Two Port City points bear on the choice. First, the currency: an arrangement inside the Area of Authority will ordinarily operate in a designated foreign currency. Second, the supervisory regime: section 51A provides that the offshore banking Part does not apply to banks licensed under the Banking Act operating in and from the Area of Authority with the approval of the Central Bank, so whether a counterparty bank is licensed under this Act or under the Banking Act determines which rules govern it. We advise on that choice and on the documentation; the account terms themselves come from the institution.

Port City Colombo is positioned strategically in the heart of South Asia, on the East to West Indian Ocean trade corridor, and combines a competitive package of fiscal incentives (including BSI tax exemptions and customs relief) with non-fiscal advantages (single-window facilitation, 100% foreign ownership, free capital and profit repatriation, and a dedicated international arbitration forum).