23.
| (1)The profits and income within the meaning of paragraph (a) of section 3 (other than profits and income from the sale of any capital asset within the meaning of paragraph (b) of subsection (7) of section 25) of any venture capital company shall be exempt from income tax, for a period of five years commencing from the year of assessment in which the company commences to carry on commercial operations, where such company invests a sum of money as specified in subsection (2), which investment shall be identified as a specific investment, for the purchase of ordinary shares in a company engaged in -
| | (a) a project which is of a pioneering nature and the operation of which results in value addition and the promotion of economic development; | | |
| | (b) a project which is engaged in the business of information technology; | | |
| | (c) any other project as may be specified by the Minister by Order published in the Gazette, | | |
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| (2) In order to qualify for the tax exemption provided for in subsection (1), the venture capital company shall have invested a sum -
| | (a) not less than forty per centum of the total equity capital of such company, during the second year from the year in which such company commenced its commercial operations, on or before the end of that second year; | | |
| | (b) not less than eighty per centum of the total equity capital of such company, during the third year from the year in which such company commenced its commercial operations, on or before the end of that third year; | | |
| | (c) not less than eighty per centum of the total equity capital of such company, during the fourth and fifth years from the year of commencement of commercial operations, on or before the end of such fourth and fifth years respectively, | | |
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| (3)Investment may be made in foreign companies, and such investments shall be considered as a specific investment for the purpose of this section in the second year and thereafter, where such investment is not more than ten per centum of equity capital of such company during the second year and not more than twenty per centum of equity capital of such company during the third year and subsequent years respectively, from the year in which such company commences its commercial operations. |
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| (4) During the first three years including the year in which such company commences its commercial operations, any equity capital in excess of the minimum investments required by subsection (2) may be invested in Government Securities and such investment shall be considered as a specific investment. |
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| (5) The year of commencement of commercial operations for the purpose of this section, shall be the year in which the issued equity capital of the venture capital company has reached one hundred million rupees and shall not apply in respect of commercial operations commencing on or after April 1, 2008. |
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| (6) For the purposes of this section :- |
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Sri Lanka Consolidated Acts