Analysts say due to tax holidays other levies such as 'economic service charge' and 'port and airport development levy' had crept into the system, making Sri Lanka's tax regime extremely complex.
The IMF report following the third review under its program with Sri Lanka said BOI tax holidays have been the "largest contributor to Sri Lanka’s eroded tax base," and limiting new concessions "would be the most significant base-broadening tax measure" in tax reforms.
Depending on how narrowly the new concession regime is defined, it could give as much as 1.5 percent of gross domestic product in taxes, the report said.
"Since a sizeable portion of existing concessions are set to expire over the next two years, and more importantly since all new investme