Sri Lanka greenlights a 25-year tax exemption for the $540M Clothespin Towers in Port City, featuring luxury hotels, vertical art galleries, and a mystery Dubai firm.
The government has completely waived taxes for a period of 25 years for an investment planned to be made in Colombo Port City, setting a Guinness World Record.
Clothespin Management and Development (Private) Limited is planning to build a 15-meter-high, unique structure in the Port City, similar to the giant Big Ben clock, with plans to join the Guinness Book of World Records and set a Guinness World Record, according to an Extraordinary Gazette issued by President Anura Kumara Dissanayake, Minister of Finance, Planning and Economic Development, on July 14, 2025.
What is included in the Clothespin Towers twin tower project?
The twin-tower project, called Clothespin Towers, will be built on a 24,324-square-meter site in the Port City and will feature luxury residences, a seven-star hotel, high-end restaurants, high-end retail and office space for rent, as well as state-of-the-art infinity pools and wellness centers.
Furthermore, the smart building system, designed according to LEED Gold certification, integrates energy-efficient infrastructure, solar energy, rainwater harvesting, and automated climate control systems.
Also, one of the towers is planned to house the world’s largest art gallery, which will be the world’s largest vertical art gallery, the Gazette said.
How much will the project cost?
The total investment in this project is US$540,104,317, of which US$75,000,000 has been allocated for land lease.
The gazette notification states that US$465,104,317 will be spent on construction and pre-operational costs of the Port City.
Two hundred and eighty employees are scheduled to be recruited in the first year of this investment.
The license for this project was issued on March 28, 2025, and the gazette also states that the business should be started within six months.
How tax concessions have been provided until 2060
The government has also provided exemptions or incentives for the relevant project to Clothespin Management and Development (Private) Limited for a maximum period of 35 years from July 14, 2025, to July 13, 2060.
Tax exemption and incentive have been provided for taxes falling under the relevant Local Revenue Act from July 14, 2025, to July 13, 2060.
Accordingly, after the expiry of the 25-year period of tax exemption, an incentive of 50% of the import tax rate should be received for a period of 10 years.
Under the Value Added Tax Act No. 14 of 2002, all imports and local purchases of business-related goods and services approved by the Commission are eligible for tax exemption from July 14, 2025, to July 13, 2050.
Furthermore, this project is exempted from all provisions of the Finance Act No. 11 of 2002 and the Finance Act No. 5 of 2005 from July 14, 2025, to July 13, 2050.
It is also exempted from all taxes, duties, and levies imposed by the Excise Special Provisions Act No. 13 of 1989, the Customs Ordinance, the Ports and Airports Development Act No. 18 of 2011, and the Sri Lanka Export Development Act No. 1979 for the above period.
Furthermore, the project is exempted from all provisions other than the regulations imposed on the Colombo Port City for the above period under the Foreign Exchange Act No. 12 of 2017.
The project is exempted from any exemption or incentive under the Casino Business Regulation Act No. 17 of 2010, the Entertainment Tax Act, and the Betting and Gaming Tax Act No. 40 of 1988.
Similarly, the Workers’ Protection (Termination) Act No. 45 of 1971 has also been exempted from all provisions from July 14, 2025, to July 13, 2050.
“Clothespin Management and Development (Private) Limited, a company incorporated in Sri Lanka, intends to create a permanent artistic and architectural landmark in the Colombo Port City under the name of Clothespin Towers, which will attract world-renowned investors, global influencers, and prominent companies,” the Extraordinary Gazette further states.
How did this deal come about?
An official of the China Harbour Company told BBC Sinhala that the project to be built in the Colombo Port City was a project received by Sri Lanka through its investment company, China Harbour Company.
However, since the land ownership of the Port City belongs to the Sri Lankan government, all transactions regarding the project will be done through the Cabinet.
An extraordinary gazette was issued in this regard accordingly.
What is Clothespin Management and Development (Private) Limited?
The relevant Extraordinary Gazette states that the construction of this project will be carried out by a Sri Lankan-incorporated company called Clothespin Management and Development (Private) Limited.
The company named Clothespin Management and Development (Private) Limited is said to be a company operating in Dubai, and the Gazette states that it has been registered with the Sri Lankan Registrar of Companies.
However, despite searching the Internet for further details about the company in question, no information regarding the company or its official website could be found.
Meanwhile, the China Harbour Company official said that Clothespin Management and Development (Private) Limited is operating as a construction company in Dubai.
Colombo Port City Land and Ownership
Out of the 269 hectares of land reclaimed by Colombo Port City, 178 hectares have been set aside for investment, while the remaining 91 hectares have been set aside for public spaces such as roads and public parks.
The China Harbour Company official said that 100% of the land in the Port City belongs to the Sri Lankan government.
However, the official stated that 43% of the land has been given to China Harbour Company, the company that built the Port City, for investment under Lease Holding Rights.
According to the official, the project to be built by Clothespin Management and Development (Private) Limited is being built on land that has been granted to China Harbour Company on a leasehold basis.
Government’s ‘change in position’ on the Port City
The JVP was one of the groups that strongly opposed the construction of the Colombo Port City from the beginning.
The Colombo Port City had become a major topic of the JVP’s public rallies held in 2015.
At a rally held in Tangalle on February 8, 2015, it was said that the JVP would “take the necessary pressure to stop the reclamation of the sea” for the construction of the Port City.
“For the first time in Sri Lanka, 575 acres in front of the Colombo Golf Course, not a small amount, think about it, 575 acres. They reclaimed it for China, gave it to China to build an island. 575 acres. In our country, there is a law to reclaim a paddy field. In our country, there is a law to reclaim a swamp. In our country, there is no law to reclaim the sea….”
“An engineer told me that 120 million cubic meters of stone alone have been found. Only 20 million have been found. They did not look at where the stone was quarried. The Cabinet made a decision the day before yesterday and said that Rajitha Senaratne should continue this project. That is not why the Rajapaksa family lost. That is not why Ranil and Maithripala Sirisena were given power… The reclamation of the sea must be stopped. The JVP is exerting the necessary pressure to stop it.”
