Sri Lanka Export Processing Zone Benefits

Program Overview

Sri Lanka operates five Export Processing Zones (EPZs) at Katunayake, Biyagama, Koggala, Mihinthale, and Pallekale, offering comprehensive incentives for export-oriented manufacturers. Companies exporting more than 90% of production qualify for customs duty exemptions on capital goods and raw materials. Apparel and ceramics manufacturers receive benefits with lower 60% export thresholds. EPZs provide developed infrastructure, streamlined administration, and preferential tax treatment, creating competitive advantages for businesses targeting international markets while benefiting from Sri Lanka's strategic location and competitive operating costs.

Customs Duty Exemptions

EPZ enterprises exporting 90%+ of production receive complete customs duty exemptions on imported capital goods including machinery, equipment, and tools necessary for manufacturing operations. Raw materials, components, and intermediate goods imported for production destined for export markets enter duty-free, significantly reducing manufacturing costs. Apparel and ceramics sectors qualify for these exemptions with 60% export thresholds, recognizing their strategic importance to Sri Lanka's economy. These exemptions enable cost-competitive production for international markets and reduce working capital requirements.

Tax and Investment Incentives

EPZ investors access preferential corporate tax rates and potential tax holidays depending on investment scale and sector. Constitutional guarantees protect investments, ensuring policy stability and legal protections. Companies benefit from 100% repatriation of profits and capital, enabling flexible fund management and investor returns. Exchange control exemptions facilitate international transactions. Combined with customs benefits, these fiscal incentives create highly competitive operating environments for export manufacturers, particularly in textiles, electronics, and light manufacturing sectors.

Infrastructure and Location

EPZs provide developed industrial land with reliable utilities, transportation access, and modern telecommunications. Proximity to Colombo port and Bandaranaike International Airport facilitates efficient logistics. Streamlined administration through dedicated EPZ authorities reduces bureaucratic burden. The Katunayake zone, established in 1978, demonstrates long-term stability and proven success. Additional zones at Biyagama, Koggala, Mihinthale, and Pallekale offer geographic diversity and sector specialization opportunities. Sri Lanka's strategic Indian Ocean location provides access to South Asian, Middle Eastern, and African markets.

Application Process

Contact BOI to explore EPZ locations and available facilities. Submit project proposals detailing manufacturing plans, export strategies, investment amounts, and employment projections. Applications require evidence of export market commitments or clear export orientation. BOI evaluates proposals based on export potential, job creation, investment size, and sector alignment. Approved enterprises receive EPZ licenses enabling access to customs exemptions and tax benefits. BOI provides ongoing support with land allocation, construction permits, customs clearances, and operational facilitation throughout establishment and operations.