Sri Lanka's cabinet approved a 350 million U.S. dollar project by Australian gambling mogul James Packer to build giant a casino in the capital Colombo on Thursday.
Cabinet spokesman and Media Minister Keheliya Rambukwella told media that the project, which has been given significant concessions by the government, would now go ahead.
"The Finance Ministry together with the Excise department has issued gaming licenses and the casino section of the integrated projects will be taxed," he added.
The Sri Lankan government approved tax concessions through a midnight gazette notification released on 18 July, which resulted in the ire of the main opposition, United National Party (UNP) MP and Economist Dr. Harsha de Silva.
Speaking to the media Dr. de Silva insisted that the 350 million U.S. dollar project was detrimental to the country as it did not bring in any income through taxes and should never have been approved.
A copy of the Gazette notification obtained by Xinhua showed that in addition to a ten-year income tax holiday the casino will be charged only 6 percent tax for another 12 years.
It also details extensive tax exemptions from Customs Duty, Construction Industry Guarantee Fund Levy, Port and Airport Development Levy, V.A.T, PAYE tax for foreign employees (five years), Withholding Tax on foreign loan interest and Tax on Dividends for 11 years.
Dr. de Silva said that the rate is incongruous with the general international practice. He said that Macau, which is the one of the largest gaming regions in the world, charged 40 percent tax while Singapore, Malaysia and Philippines also had high rates.
"Sri Lanka goes into the record books as the first country in the world that exempts casinos from tax," he said, adding that there were massive irregularities in the deal including the licensing of the casino.
A second casino venture by local conglomerate John Keels Holdings (JKH) for 650 million U.S. dollars was also approved by the Cabinet and it too is earmarked to get extensive tax concessions from the Sri Lankan government.
"It will create direct employment opportunities for 3,000-4,000 persons during the construction period and in addition, 3,000 direct and indirect employment on commencement of business operations," the paper noted.
Both projects are expected to be completed by 2015.