Tax breaks can incentivize property developers to invest in new projects”

Providing Tax breaks can incentivize property developers to invest in new projects, creating jobs and boosting local economies and stimulate Economic Growth, said Principal, Tax & Regulatory KPMG Sri Lanka, Suresh R.I. Perera. (Pictured) he opined this at the Chamber of Construction Industry hosted Seminar on, “Tax issues concerning Construction Industry” at GAP Institute, Colombo 07.

He said that this can lead towards increases in Housing Supply. “Reduced tax burdens can make housing more affordable, particularly for first-time buyers and middle-income earners. It can also attract foreign investment as preferential tax treatment can make a country more attractive to foreign investors, bringing in capital and expertise.”

He however said that providing tax breaks may primarily benefit wealthy developers and investors, potentially exacerbating income inequality and will reduce revenue to the government.

“Tax breaks can be susceptible to corruption and inefficiency, with benefits not always reaching intended recipients.”

Reduction of taxes can bring in more infrastructure development as large-scale developments often require significant infrastructure investment, which can benefit the wider community. He also said that the IMF Technical Assistance Report in May 2024 says that to improve neutrality and fairness, Sri Lanka’s VAT system should be aligned with international best practice, including by imposing tax on the first sale of all residential property.

Types of tax incentives around the globe for property developers include tax breaks: These can include reduced corporate tax rates, exemptions from property taxes or accelerated depreciation allowances). Investment incentives: Governments may offer tax credits or subsidies for investments in specific regions or projects. Stamp duty exemptions: This can reduce the upfront costs of property purchases, making it more attractive for developers to acquire land and Land use concessions: Governments may offer favorable land use policies, such as zoning changes or expedited approvals, to encourage development.

The Seminar’s objectives were elaborated by Secretary General/ CEO/CCI, Eng. Nissanka Wijeratne, while the opening speech was delivered by President/CCI, Archt. Jayantha Perera.

Source: Daily News