Investing in Port City Colombo the legal guide
A 29-page guide to the Colombo Port City Economic Commission Act as it stands after the Amendment Act No. 1 of 2026 and the regulations of 2025. Every proposition carries its section, so it can be checked against the enacted text rather than taken on trust.
Third edition · Law stated · PDF 2.7 MB · Free
In summary
Four things still said about Port City that are no longer the law
Each still appears in brochures, press coverage and advisers’ material written before 2026. The guide opens with them, and gives the section that replaced each one.
- 01
Employment income is not tax-free
Section 35, as replaced in 2026, confines the income tax exemption to employees of a person licensed before that section commenced, and then to three years. Section 35(3) makes employees of anyone licensed on or after that date liable to income tax.
- 02
There is no forty-year incentive period
The forty-year ceiling in section 52(7) was removed in 2026. The period of validity is now as prescribed, and what is prescribed is Regulations No. 1 of 2025 — a different and shorter structure, set out at chapter 06.
- 03
Incentives can now be taken away
Sections 52A and 52B, inserted in 2026, let the Commission restrict, suspend or revoke any or all exemptions, and impose administrative penalties, where key performance indicators are missed. The Ministry of Finance may review the period and the incentives every five years.
- 04
There is no statutory investor visa
The Act creates no visa and fixes no period. It says twice that the decision of the Controller of Immigration and Emigration is final — sections 33(3) and 34.
Contents
Ten chapters, each argued in a sentence
Each chapter opens with the proposition it goes on to establish, and each is also published here as a page, so it can be read, linked and cited without the download.
- 01p. 7
The statutory framework
Port City Colombo is not a policy or a concession. It is a jurisdiction carved out by statute, and the statute is where every question about it begins.
- 02p. 9
What changed in January 2026
The 2026 amendment rewrote the two provisions an investor is most likely to have relied on: the tax treatment of employment income, and the duration of incentives. Both changed against the investor.
- 03p. 12
Establishing a business
Who may operate, what they must obtain, and what the Commission may charge them before they have it.
- 04p. 14
Currency, payments and offshore banking
The Area of Authority runs on designated foreign currency. The rupee enters it by defined exceptions only.
- 05p. 16
Property
Condominium parcels, the rupee route, and the five-year remittance obligation that is widely described as something it is not.
- 06p. 18
Tax, incentives and the Business of Strategic Importance
Thirteen enactments, granted in full or in part, for a period the Act no longer fixes — and which regulations now do.
- 07p. 22
Employment and immigration
The most consequential change of 2026 sits here, and so does the most commonly overstated entitlement.
- 08p. 24
Dispute resolution
Mandatory arbitration inside the zone, enforcement under the Arbitration Act, and a statutory direction to the courts that is rarely mentioned.
- 09p. 25
The questions that decide it
Eleven questions we work through before advising on a Port City commitment. None of them has a general answer: each turns on the facts of the transaction and on sources that have to be checked as they stand on the day.
- 10p. 28
How AW Chambers assists
A Colombo practice at the Bar since 1987, instructed by corporates, financial institutions, state entities and counsel practising abroad.
Chapter 09
The questions that decide it
Eleven questions we work through before advising on a Port City commitment. None has a general answer: each turns on the facts of the transaction and on sources that have to be checked as they stand on the day.
- 01
When did section 35, as replaced, commence — and does this employer’s licence predate it? The answer decides whether employment income is exempt at all, and for how long.
- 02
Are Regulations No. 1 of 2025 still the regulations in force under sections 52(2) and 52(7) on the day the question is asked, and has anything been made since? The forty-year figure is no longer in the Act, and what replaced it is prescribed rather than enacted — which means it can be replaced again without a Bill.
- 03
Regulation 8 gives Regulations No. 1 of 2025 a life of five years from their coming into operation, and regulation 7 makes the incentives non-negotiable and non-renewable. What becomes of a fifteen-year holiday granted under a five-year regulation, and does the section 32 agreement answer the question or leave it open?
- 04
Which prescribed category does this investment fall into, on what valuation of the plot; when does its project implementation period end, given that the holiday only starts when it does; and what happens to the designation if the job numbers are not reached?
- 05
What key performance indicators would attach to the designation, and can the sponsor live with the consequences of missing them under section 52A(3), and with publication under section 52A(1)?
- 06
Does the section 32 agreement embody the incentives granted, as section 52(4) requires?
- 07
Does this buyer fall inside or outside the Land (Restrictions on Alienation) Act, No. 38 of 2014 — and what could move it across that line during the life of the holding?
- 08
On a rupee purchase, what does the section 39 remittance obligation do to the return, and to what account must the proceeds be remitted?
- 09
Does the dispute clause comply with section 62(3), and does any earlier tier depend on an enactment Schedule III disapplies?
- 10
For a bank, is it licensed under this Act or under the Banking Act — section 51A — and which supervisory regime follows?
- 11
Does the transaction need access to the domestic Sri Lankan market, and has a section 37 authorisation been obtained rather than assumed?
The questions are set out because a sponsor is entitled to know what turns on what. The answers are not, because they do not exist in the abstract.
Put them to us on your factsWritten for
Sponsors and developers
Designation as a Business of Strategic Importance, the prescribed thresholds, and the key performance indicators a package will later be measured against.
Investors, lenders and buyers
Licensing, the section 32 agreement, the section 39 remittance obligation, and what the 2026 amendment did to the numbers in the model.
Counsel advising from abroad
A cited map of the Act as it now stands, so that a foreign-law opinion or term sheet does not rest on a provision that was replaced in January 2026.
Edition history
What changed, and when
Holding an earlier copy? This page always carries the current edition. Anything issued before January 2026, including our own first edition, states law that has since been replaced.
· Current
Third edition
- Regulations No. 1 of 2025 (Gazette No. 2454/62), read in the Gazette text: the four Primary categories with their investment, employment, holiday and implementation-period figures; what each designation carries; and that the incentives are non-negotiable and non-renewable.
- Why removing the forty-year ceiling in 2026 left those regulations as the only source of the number.
- Two new diligence questions in chapter 09, on the life of the regulations and on the prescribed category.
- An abstract of the four propositions most often still stated in their pre-2026 form.
Second edition
- The Colombo Port City Economic Commission (Amendment) Act, No. 1 of 2026: section 35 replaced, section 52(7) substituted, sections 52A to 52E inserted, and the offshore banking Part rewritten.
First edition
- A five-page overview stating the Act as enacted in 2021. Superseded twice; it should not be relied on.
Citing the guide
AW Chambers, Investing in Port City Colombo: A Legal Guide to the Colombo Port City Economic Commission Act (third edn, 29 September 2026) <https://www.awchambers.com/port-city-colombo/guide>
Please link to this page rather than hosting the file. The guide’s notices do not permit it to be republished, and a copy held elsewhere goes on stating the law as at the day it was taken; this page is updated when the law is.
The framework
Port City Colombo, chapter by chapter, with the FAQ and the regulatory instruments
Property
How the Land (Restrictions on Alienation) Act treats foreign buyers outside the Port City
Instructions
Put a Port City matter to the Chambers
The guide states the law as at 29 September 2026 in general terms and cites the sections it comes from. It does not apply the law to any transaction and is not legal advice; nothing on this page or in the guide creates a lawyer–client relationship, which arises only when AW Chambers has accepted instructions in writing. The full notices are at the front of the guide.
