Economic Service Charge (Amendment) Act 2011

This Act may be cited as the Economic Service

Charge (Amendment) Act, No. 11 of 2011.

The Economic Service Charge Act, No. 13 of 2006

(hereinafter referred to as the “principal enactment”) is hereby amended in section 2 as follows:—

by the substitution for paragraph (a) and (b) of subsecion (2) thereof, of the following—

by the substitution for the word “Schedule” in subsection 1 of that section the words “Schedule I”

Section 7 of the principal enactment is hereby amended as follows :—

“(1)

by the re-numbering of that section as subsection (1) thereof;

in the re-numbered subsection (1), by the substitution for the words “for any relevant quarter shall,” of the words and figures “for any relevant quarter ending on or before March 31, 2011 shall,”; and

by the addition immediately after the re-numbered subsection (1) of the following new subsecion:—

The following new section is hereby inserted immediately after section 10 of the principal enactment and shall have effect as section 10A of that enactment :—

10A. (1) The turnover from the business of any Islamic Financial Transaction shall be chargeable to tax in terms of the provisions of this Act.

The Commissioner-General of Inland

identifying the circumstances which would amount to an Islamic Financial

ascertaining the profit and income arising out of any Islamic Financial

Section 13 of the principal enactment is hereby amended by the substitution for the definition of the expression “person” of the following definition :—

“person” includes a company or body of persons, but does not include—

any registered society, within the meaning of the Co-operative Societies Law, No. 5 of 1972

any person carrying on business as an owner or charterer of an aircraft or ship;

any government institution or local authority as defined in the Inland Revenue Act, No. 10 of 2006;

any distributor;

any dealer in a lottery;

any Unit Trust or Mutual Fund.”.

The Schedule to the principal enactment is hereby amended by the substitution for the word “Schedule” of the following:—

“SCHEDULE I

For the period ending on March 31, 2011”; and

The following new Schedule is hereby inserted immediately after Schedule I of the principal enactment and shall have effect as Schedule II of that enactment:—

Act, No. 11 of 2011

“SCHEDULE II

(Section 2)

For the period commencing on April 1, 2011

PART OF THE LIABLE TURNOVER

1. Enterprises to which the Board of

Investment of Sri Lanka Law, No. 4 of 1978 is applicable (liable to pay income tax)—

Apparel exporters;

Board of Investment houses;

Manufacturers of textiles for apparel exporters.

who are exempt from income tax

who during certain periods are incurring losses;

who are subject to tax under concessionary rates;

who are engaged in wholesale or retail trade other than products manufactured or produced by the seller (excepting distributors or dealers in motor vehicles or liquor);

who carry out primary conversion of any tea, rubber or coconut plantation including desiccated coconut, coconut oil or fiber, copra and sheet rubber, but excluding any conversion which produces any alcoholic beverage.

prior to April 1, 2011

on or after April 1, 2011

Any person or partnership carrying on an enterprise, having an annual turnover of a sum not exceeding rupees one hundred million who is liable to pay the economic service charge under this Act, who has defaulted in the payment of such economic service charge as is payable by him under this Act in respect of any year of assessment ending on or before December 31, 2010, due to the existence generally of any conflict environment or due to any financial constraints of such person or partnership, shall be exempt from the payment of such charge as is in default under this

Act :

Provided that, the Commissioner-General of Inland

Revenue shall on a request made in that behalf, issue to such person or partnership a Certificate of Exemption in respect of the sum in default :

Provided further, the person or partnership to whom the

Certificate of Exemption is issued, shall simultaneously forward to the Commissioner-General of Inland Revenue a written assurance to the effect that such person or partnership will be responsible for the payment of all sums which may become payable by him under this Act, in respect of any future year of assessment commencing on or after January 1,

2011.

In the event of any inconsistency between the Sinhala and Tamil texts of this Act, the Sinhala text shall prevail.

Act, No. 11 of 2011