86. Exemption from income tax of non-resident persons in certain cases and liability of certain non-resident persons to income tax at reduced rates

Where the assessable income for any year of assessment of an individual deemed to be non-resident under subsection (7) of section 79, consists solely of income from services rendered in Sri Lanka and does not exceed three hundred thousand rupees, such income shall not be taxable.

Subject to the provisions of subsection (3), where a non-resident person receives any sum by way of dividend from a non-resident company or by way of interest, annuity, ground rent, or royalty which has been disallowed or excepted under subsection (2) of section 76, such sums shall not be regarded as income of such non-resident person arising in or derived from Sri Lanka, and he shall not be chargeable with income tax or entitled to any repayment of tax, in respect thereof.

Nothing in the provisions of subsection (2) shall operate so as to exclude any sum mentioned in that subsection from the computation of the profits of any trade or business carried on in Sri Lanka, where such sum forms part of the receipts of such trade or business.

Notwithstanding anything in any other provision of this Act, the rate at which income tax is payable by a non-resident person in respect of any royalty received by him from 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, shall not exceed the rate, if any, specified in that agreement as the rate at which income tax is deductible from that royalty.