Colombo, Sep 12 (IANS): Sri Lanka's cabinet Thursday approved a $350 million project by Australian gambling mogul James Packer to build a giant casino in the capital Colombo.

Xinhua quoted cabinet spokesman and Media Minister Keheliya Rambukwella as saying that the project, given significant concessions by the government, would now go ahead.

"The finance ministry together with the excise department has issued gaming licences and the casino section of the integrated projects will be taxed," he added.

The government approved tax concessions, which led to the ire of economist and opposition MP Harsha de Silva.

Speaking to the media, de Silva insisted that the 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 10-year income tax holiday, the casino would be charged only 6 percent tax for another 12 years.

It also details extensive exemptions from customs duty, construction industry guarantee fund levy, port and airport development levy, value added tax, pay-as-you-earn tax for foreign employees (five years), withholding tax on foreign loan interest and tax on Dividends for 11 years.

De Silva said Macau, 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 was also approved by the cabinet, and it too is earmarked to get extensive tax concessions.

Both projects are expected to be completed by 2015.