As enacted

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Inland Revenue Act 2006 · As enacted · Chapter III · Exemption from Income Tex

10. Exemption from income tax of certain dividends

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

There shall be exempt from income tax—

(a)

any dividend paid by a company with which an agreement has been entered into by the Board of

Investment of Sri Lanka under section 17 of the

Board of Investment of Sri Lanka Law, No. 4 of

1978, being an agreement which has been entered into prior to December 31, 1994, on an application made in that behalf prior to November 11, 1993–

(i)

to any person, during the period for which the profits and income of that company are exempt from income tax under the terms of that agreement or within one year thereafter, out of the profits and income of the company which are exempt from income tax;

(ii)

to any person, who is not resident in Sri Lanka notwithstanding anything to the contrary in subsection (1) of section 53;

(b)

any dividend paid to a unit holder of a unit trust or a mutual fund, out of the taxable profit and income of such unit trust or mutual fund.

(c)

any dividend paid by a flagship company with which an agreement has been entered into by the Board of

Investment of Sri Lanka, to any shareholder during the period for which the profits and income of that company are exempt from income tax under the terms of that agreement or within one year thereafter, out of the profits and income of such company which are exempt from income tax.

In this paragraph, “flagship company” means any company which has entered into an agreement with the Board of Investment of Sri Lanka under section 17 of the Board of Investment of Sri Lanka Law, No.

4 of 1978 and which has in accordance with such agreement invested in Sri Lanka, within the period specified in such agreement, not less than fifty million United State Dollars or its equivalent in any other foreign currency :—

(i)

in the purchase or construction of any building or in the purchase of any land, plant, machinery or furniture; and

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(ii)

in the acquisiton of any asset not included in sub-paragraph (i), for the use of the undertaking carried on by that company;

(d)

any dividend paid by a company with which an agreement has been entered into on or after

November 8, 1995, by the Board of Investment of

Sri Lanka under section 17 of the Board of

Investment of Sri Lanka Law, No. 4 of 1978, to any shareholder of that company during the period for which the profits and income of that company are exempt from income tax under the terms of that agreement or within one year thereafter, out of the profits and income which are exempt from income tax ;

(e)

any dividend out of the profits of any company with which an agreement has been entered into by the Board of Investment of Sri Lanka under section 17 of the Board of Investment of Sri Lanka Law,

No. 4 of 1978, from the operation by such company of a hospital with facilities for paying and non-paying patients for indoor and outdoor treatment, paid to any shareholder of such company during the peirod of five years reckoned from the commencement of the year of assessment in which such hospital commences operations ;

(f)

any dividend out of the profits within the meaning of paragraph (a) of section 3 of a company—

(i)

with which an agreement has been entered into by the Board of Investment of Sri Lanka under section 17 of the Board of Investment of Sri Lanka Law, No. 4 of 1978 ; and

(ii)

to which a mining licence issued under the

Mines and Minerals Act, No. 33 of 1992 has been assigned, paid to any share holder of such company during the period for which the profits and income of that company are chargeable with income tax, at such rate as is determined in accordance with sub-paragraph (a) of the further proviso to paragraph (iv) of regulation 2 of Regulation No. 1 of 1995, made under section 24 of the Board of Investment of Sri Lanka Law, No. 4 of 1978, as last amended by

Regulation published in Gazette 1019/13 of March 19, 1998 and specified in such agreement or within one year thereafter ;

(g)

any dividend paid to a shareholder of a company out of such profits and income of that company arising on or after April 01, 1977, which are exempt from income tax under section 15, 17, 18, 18A, 19,

20, 20A, 21, 21A, 21B, 21C, 21D, 21E, 21F, 21G or 21H of the Inland Revenue Act, No. 38 of 2000 or section 8(a) (xxxviii), 15, 16A, 16B, 16C, 16D, 17A, 17C, 17D,

17J, 17JJ, 17K, 17KK, 17L, 17M, 18, 19, 20, 20A 20B,

20C, 21, 22, 22A, 22B, 22C, 22D, 22DDD, or 22DDDD of the Inland Revenue Act, No. 28 of 1979 or under the

Inland Revenue Act, No. 4 of 1963, if such dividend is paid during the period for which such profits and income of that company are exempt from income tax under any of those provisions or within one year thereafter ;

(h)

any dividend paid to a shareholder of a company out of any such dividend received by that company during the period for which the dividends as is referred to in paragraphs (a), (c), (d), (e), (f), or (g)

respectively, are exempt from income tax, if the first mentioned divedend is paid during any year of assessment in which the second mentioned dividend was received by that company or within one year thereafter ;

(i)

any dividend paid to a shareholder of a company out of any such dividend as is referred to in paragraphs (a), (c), (d), (e), (f) or (g) respectively, received by that company through one or more intermediary companies during the period for which the dividends referred to in paragraphs (a), (c), (d), (e), (f), (g) are exempt from income tax, or within two years thereafter, if the first mentioned dividend is paid during the year of assessment in which the second mentioned dividend was received or within one year thereafter.

(2)

(a)

The provisions of paragraphs (c), (d), (e), or (f) of subsection (1) shall not apply to any dividend paid on or after April 1, 2004 in relation to any agreement feferred to therein which has been entered into on or after November 6, 2002; or

(b)

The provisions of paragraphs (g) of subsection (1) shall not apply to any dividend paid on or after April 1, 2004 by any company referred to in that paragraph which qualified for an exemption on or after November 6, 2002.

Read on from s 11

Chapter IV