As enacted

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

8. Exemption from income tax of certain profits and income of certain officers and employees

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)

the emoluments, pension and any other benefits arising to any person from the office of the President of the Republic of Sri Lanka;

(b)

one half of the official emoluments paid to–

(i)

any individual who holds any paid office under the Republic, out of the Consolidated Fund;

(ii)

any employee of any public corporation, being a public corporation which pays such emoluments or such pension or such profits from employment wholly or partly out of the sums voted annually by Parliament to such corporation, from the Consolidated Fund;

(iii)

the Governor of any Province, appointed under

Article 154B of the Constitution;

(iv)

any member of any Provincial Council;

(v)

any employee of any Provincial Council or to any officer of any Provincial Public Service;

(vi)

any member of any local authority;

(vii)

any employee of any local authority;

(viii)

any employee of any University which is established or deemed to be established, by the Universities Act, No. 16 of 1978;

(ix)

any employee of the Institute of Policy Studies of Sri Lanka, established by the Institute of

Policy Studies of Sri Lanka Act, No. 53 of 1988;

(x)

a member or employee of any board or commission of inquiry established by or under any law, being a board or commission all the members of which are appointed by the

President or by a Minister;

(c)

such pension or any such profits from employment referred to in paragraph (c) of subsection (1) of section 4, as are received by any person in respect of past services performed by such person or by any other person, whether before or after the commencement of this Act, as an individual, an employee, the Governor, a member an officer or an employee, as the case may be, referred to in paragraph (b) ;

(d)

the emoluments arising in Sri Lanka and any income not arising in Sri Lanka of any individual who is a scientist, technician, expert or adviser, who is not a citizen of Sri Lanka and who is brought to and employed in Sri Lanka by any undertaking, being an enterprise with which an agreement has been entered into by the Board of Investment under section 17 of the Board of Investment of Sri Lanka

Law, No. 4 of 1978, for the purposes of that undertaking:

Provided that emoluments of an individual shall not be exempt from income tax, after the date of the cessation of employment of such individual in such undertaking or the date on which the exemption from tax granted by such agreement ends, whichever is the earlier;

(e)

the official emoluments arising in Sri Lanka, and any income not arising in or derived from Sri Lanka of—

(i)

the Diplomatic Representative in Sri Lanka

(by whatever name or title designated) of the

Government of any other country;

(ii)

any such member of the staff of any Diplomatic

Representative referred to in subparagraph (i), any such Consul or Trade Commissioner, and any such member of the staff of such Consul or

Trade Commissioner, as is a citizen or subject of the country represented by that Diplomatic

Representative,

Consul or

Trade

Commissioner, if the Minister, on being satisfied that a corresponding official of the

Government of Sri Lanka resident in the country represented by that person is or would be granted similar exemption from income tax by that country, declares that the exemption shall apply in that case :

Provided that the exemption shall not apply in the case of any person, if such person carries on or exercises in Sri Lanka any other employment or any trade, business, profession or vocation;

(iii)

any expert, adviser, technician or official who is brought to Sri Lanka by the Government of

Sri Lanka through any Specialized Agency of the United Nations Organisation, or under the

Point Four Assistance Programme of the

Government of the United States of America, or through the Colombo Plan Organisation

(including its Technical Assistance Bureau) or through the Asia Foundation or any other organization approved by the Minister as being of a similar character, and whose salary or principal emolument is–

(A)

payable out of the funds provided by way of a grant or other assistance to the

Government of Sri Lanka by any such

Organisation, Programme or Foundation or any other organization, as the case may be; or

(B)

not payable by the Government of

Sri Lanka;

(iv)

any trainee from abroad who is sent to Sri

Lanka under any of the Technical Co-operation

Programmes of the United Nations Organisation and its Specialized Agencies, or of the

Colombo Plan Organisation, or of any other organization approved by the Minister as being of a similar character;

(v)

any official of the United Nations Organisation who is resident in Sri Lanka, and who is not a citizen of Sri Lanka;

(vi)

members of any naval, military or air force of any country other than Sri Lanka, who are in

Sri Lanka at the request or with the concurrence, of the Government of Sri Lanka;

(vii)

persons employed in any civil capacity by the

Government of any country other than Sri

Lanka who, not being persons resident in Sri

Lanka for a period exceeding three months immediately prior to the date of commencement of such employment, are so employed in or visit Sri Lanka for any purpose connected with the presence in Sri Lanka, of such members of any naval, military or air forces, as are referred to in sub-paragraph (vi);

and

(viii)

any person who is not a citizen of Sri Lanka and who is employed in Sri Lanka, by the Asia

Foundation or by the Overseas Economic Co-operation Fund of Japan or the Commonwealth

Secretariat in any of its programmes for technical co-operation with Sri Lanka or the

Commonwealth Development Corporation :

Provided that the liability to income tax of any person referred to in subparagraphs (i), (ii), (iii), (iv) or (v) as regards other income arising in or derived from Sri Lanka, shall be the same as though he was a non-resident person;

(f)

the official emoluments of any citizen of Sri Lanka who is employed as an expert, technician or official by the United Nations Organisation or by any

Specialized Agency of that Organisation;

(g)

the official emoluments of any individual who is employed by the World Tourism Organisation, the

International Irrigation Management Institute, the

Colombo Plan Bureau, the Asian Development Bank, the World Bank, the International Committee of the

Red Cross, the World Conservation Union or the

European Investment Bank;

(h)

the value of any travel warrant or passage granted to a person who is not a citizen of Sri Lank,a to enable him to come to Sri Lanka to assume duties or to visit his home abroad, or to return from Sri Lanka on the termination of his services, whether on retirement or otherwise , or of any travel warrant or passage granted to the wife or any son or daughter of such person to come to Sri Lanka or to visit his or her home abroad or to return from Sri Lanka, on the termination of the services of such person;

(i)

any allowance granted by an employer to his employee for travelling, subsistence and lodging, in respect of travel by such employee outside Sri

Lanka, in connection with his employment;

(j)

the emolument earned or the pension arising in any year of assessment, in foreign currency, by or to any individual resident in Sri Lanka in respect of–

(i)

services rendered by him in that year of assessment; or

(ii)

past services rendered by him or his spouse, outside Sri Lanka in the course of any employment carried on, or exercised by him or his spouse, if such emoluments or pension are paid to him in Sri Lanka or such emoluments or pension (less such amount expended by such individual outside Sri Lanka as is considered by the Commissioner-General to be reasonable expenses) are remitted by him to Sri

Lanka;

(k)

the value of any free transport by motor coach provided by an employer to an employee for travel by such employee, from his residence to his place of work or from his place of work to his residence;

(l)

such part of any sum paid to an employee at the time of his retirement, from any provident or pension fund or the Employees Trust Fund established by the Employees Trust Fund Act, No. 46 of 1980, as represents income derived by that fund, for any period commencing on or after April 1, 1987, from investments made by it;

(m)

such part of any sum referred to in paragraph (c) of subsection (1) of section 4, paid to any employee at the time of his retirement from any employment in any company formed under the Conversion of Public

Corporations or Government Owned Business

Undertakings into Public companies Act. No, 23 of 1987, as is attributable to his period of service ending before April 1, 1997, in any public corporation or any Government Owned Business Undertaking, as the case may be;

(n)

such part of any sum referred to in paragraph (c) of subsection (1) of section 4, paid to any employee at the time of his retirement from any employment in any public corporation or at any subsequent time, as is attributable to the period of service of such employee prior to April 1, 1997, in such public corporation;

(o)

such part of any sum as does not exceed two million rupees, paid to any employee by the employer of such employee, being a sum paid as compensation for loss of any office or employment consequent to—

(i)

the voluntary retirement by such employee in accordance with a scheme which in the opinion of the Commissioner-General, is uniformly applicable to all employees employed by such employer; or

(ii)

the retrenchment of such employee by such employer in accordance with a scheme approved by the Commissioner of Labour.

(2)

Nothing in paragraph (d) of subsection (1) shall apply to or in relation to any individual who is not a citizen of Sri

Lanka, and who—

(a)

has entered into a contract of employment; or

(b)

is brought to and employed in Sri Lanka, with or by any undertaking, other than an undertaking being an enterprise with which an agreement has been entered into prior to December 31, 1994, on an application made in that behalf prior to November 11, 1993 by the Board of Investment of Sri Lanka, under section 17 of the Board of Investment of

Sri Lanka Law, No. 4 of 1978.

(3)

Notwithstanding the provisions of the proviso to paragraph (d) of subsection (1) and of subsection (2), the emoluments of any individual who is not a citizen of Sri

Lanka and who is brought to and employed in Sri Lanka by an enterprise 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 which has opted to be charged with income tax in lieu of the exemption from income tax granted under such agreement, shall be exempt from income tax upto the date of cessation of employment of such individual in such enterprise or the date on which the exemption from income tax granted in respect of such enterprise would, but for such option, have ended, whichever is the earlier.

Read on from s 9

Chapter IV