Inland Revenue Act 2017 · As enacted · Part I
53. Partnerships
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
Subject to subsection (2), a partnership shall not be liable to pay income tax with respect to its taxable income and shall not be entitled to any tax credit with respect to that income, but shall be liable to pay income tax with respect to withholding payments.
The provisions of subsection (1) shall not apply to a partnership to the extent that the partnership’s taxable income includes a gain from the realisation of an investment asset.
Partnership income or a partnership loss of a partnership shall be allocated to the partners in accordance with this Division.
Amounts derived and expenditure incurred in common by partners shall be treated as amounts derived or expenditure incurred by the partnership and not by the partners.
Assets owned and liabilities owed in common by partners shall be treated as assets owned or liabilities owed by the partnership and not by the partners and shall be treated as –
in the case of assets, acquired when they begin to owe such assets in that way;
in the case of liabilities, incurred when they begin to owe such liabilities in that way; and
realised when they cease to be so owned or owed in that way.
Subject to this Act, all business activities of a partnership shall be treated as conducted in the course of a single partnership business.
Subject to this Act, arrangements between a partnership and its partners shall be recognised in instances other than the following, which shall be taken into account in determining a partner’s share under subsection (5) of section 55:-
loans made by a partner to a partnership and any interest paid with respect thereto; and
services provided by a partner to a partnership
(including by way of employment) and any service fee or income from employment payable with respect thereto.
Subject to any consequences under section 63, where there is a change of partners in a partnership at least two existing partners continue with the partnership, the partnership shall be treated as the same entity both before and after the change.
The precedent partner or in the absence of such partner in Sri Lanka, an agent of the partnership in Sri Lanka, shall withhold tax in accordance with section 84 and at the rate provided for in paragraph 10 of the First Schedule to this
Act on each partner’s share of any partnership income of the relevant partnership year, excluding the share of any partnership income that includes a gain from the realisation of an investment asset in respect of which tax is payable on assessment by the partnership.