How Sri Lanka's new financial district works — the Economic Commission, Authorised Person status, the multi-currency regime and the revised incentives for Businesses of Strategic Importance.
Rising from the sea beside Galle Face Green, Colombo Port City is the most ambitious development project in Sri Lanka's history. Around 269 hectares of land were reclaimed from the ocean, with reclamation completed in 2019, and the area is now being built out as a special economic zone with its own regulator and its own rules. For international companies looking at South Asia, it offers something new: a Sri Lankan base with a framework designed specifically for international business.
A zone with its own law
Port City is governed by the Colombo Port City Economic Commission Act, No. 11 of 2021. The Act created the Colombo Port City Economic Commission, which acts as the single authority for the zone. It leases land, registers and licenses businesses, and grants the approvals an investor needs to operate there.
The key concept is the Authorised Person. Only businesses and individuals authorised by the Commission may carry on business inside Port City. In practice, the authorisation application is where your business plan, ownership structure and funding are examined, and it is the first milestone for any project.
Doing business in foreign currency
One of Port City's distinguishing features is its currency regime. Authorised Persons can transact in a set of designated foreign currencies — sixteen at the time of writing — rather than being tied to the Sri Lankan rupee for business inside the zone. For firms serving regional clients, trading internationally or managing funds, this removes a significant layer of conversion cost and currency risk.
Incentives: Businesses of Strategic Importance
The Act allows the government to designate certain projects as Businesses of Strategic Importance (BSIs) and grant them incentives such as tax exemptions.
These incentives have been revised. The early framework allowed very long tax holidays — up to 40 years. Following reforms introduced alongside Sri Lanka's IMF-supported programme, reported in 2025, the regime was tightened: primary BSIs now receive corporate income tax holidays in the range of 8 to 15 years, and secondary BSIs receive a concessionary 7.5% rate for four years. Designations are made case by case, and each one is published.
The pipeline is active. In May 2026, for example, six companies working in IT, logistics, consultancy and maritime technology were granted BSI status, with around US$14.6 million of planned investment between them.
What is being built
Port City is planned in five precincts: a Financial District, Central Park Living, Island Living, a Marina and an International Island. Visible milestones so far include:
- The Mall, a large retail complex, which opened in September 2024
- Leases approved for a hospital and an international university
- A luxury marina, under construction and targeted for 2027
Who Port City suits
Port City is best suited to businesses that:
- serve international or regional clients rather than mainly the domestic market
- benefit from transacting in foreign currency
- work in financial services, technology, shared services, logistics, education or healthcare
- need a prestige address and modern infrastructure in central Colombo
A business that mainly sells into Sri Lanka's domestic economy may still be better served by a conventional company registration, with or without BOI approval, outside the zone.
Practical points before you commit
- Model the incentives you will actually get. Do not rely on older materials that quote 40-year holidays.
- Plan the authorisation early. It drives your timetable for leasing premises, hiring and banking.
- Understand how money moves in and out of the zone — between Port City, the rest of Sri Lanka and overseas — including any taxes that apply to supplies into the domestic market.
- Check the latest amendments. The legal framework is still developing, and amendments to the Act were tabled in Parliament in late 2025.
How Arwa Lanka can help
We help international companies assess whether Port City is the right base, prepare the Authorised Person application, and compare it with a conventional BOI or company structure. Book a confidential consultation to discuss your plans.
This article is general information and not legal, tax or investment advice. Always confirm the current position with the Commission and your advisers.
Sources: Colombo Port City Economic Commission · Varners — Overview of the Colombo Port City Economic Commission Act 2021 · Daily FT — Six Colombo Port City firms get strategic business status (May 2026) · Port City Colombo — overview