The Role of Government Tax Policies in Promoting Tourism Investment in Sri Lanka
Fernando, Olivia (2026)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202602122815
https://urn.fi/URN:NBN:fi:amk-202602122815
Tiivistelmä
Tourism is a significant contributor to economic growth, employment creation, and foreign exchange earnings in developing countries. In Sri Lanka, tourism has been identified as a priority sector, and government tax policies have been widely used as instruments to promote tourism related investments. The purpose of this thesis was to examine how government tax policies are used to promote tourism investment in Sri Lanka and to assess the extent to which sustainability considerations are incorporated into these policies. The study was limited to selected fiscal incentives that directly influence investment decisions in the tourism sector.
The theoretical framework of this study was based on fiscal policy theory, foreign direct investment theory, and sustainable tourism theory. A qualitative research approach was applied, and the study was implemented using document analysis. Secondary data consisted of publicly available policy documents, tax legislation, investment guidelines, tourism development strategies, and international reports published between 2009 and 2025. The collected data were analyzed using qualitative thematic analysis to identify key tax incentives, policy patterns, and sustainability related themes.
The results indicate that Sri Lanka uses various tax incentives to attract investment in tourism. These tax incentives are tax holidays, decreased corporate income tax rates, accelerated depreciation, investment allowances, an exemption of customs duties and Value Added Taxes. Although these incentives can be broadly compared with those applied by the competing tourism destinations, the results showed that the frequent policy changes reduce predictability and lower and undermine investor confidence. Further, although sustainability objectives are being valued in tourism policy documents, the integration into tax incentive schemes remains limited. The study concludes that improving policy stability and strengthening the linkage between this incentives and sustainability objectives would support long term and sustainable tourism investment in Sri Lanka.
The theoretical framework of this study was based on fiscal policy theory, foreign direct investment theory, and sustainable tourism theory. A qualitative research approach was applied, and the study was implemented using document analysis. Secondary data consisted of publicly available policy documents, tax legislation, investment guidelines, tourism development strategies, and international reports published between 2009 and 2025. The collected data were analyzed using qualitative thematic analysis to identify key tax incentives, policy patterns, and sustainability related themes.
The results indicate that Sri Lanka uses various tax incentives to attract investment in tourism. These tax incentives are tax holidays, decreased corporate income tax rates, accelerated depreciation, investment allowances, an exemption of customs duties and Value Added Taxes. Although these incentives can be broadly compared with those applied by the competing tourism destinations, the results showed that the frequent policy changes reduce predictability and lower and undermine investor confidence. Further, although sustainability objectives are being valued in tourism policy documents, the integration into tax incentive schemes remains limited. The study concludes that improving policy stability and strengthening the linkage between this incentives and sustainability objectives would support long term and sustainable tourism investment in Sri Lanka.