53. Income tax to which any resident company is liable

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

The income tax to which any company resident in Sri Lanka in any year of assessment shall be liable for that year of assessment shall consist of an amount—

(a)

calculated on the taxable income of such company for that year of assessment at the appropriate rate specified in the Second Schedule to this Act ; and

(b)

equal to fifteen per centum of the aggregate amount of the gross dividends distributed by such company in that year of assessment out of the profits on which the taxable income of such company is computed for any year of assessment, :

Provided however a quoted public company shall not be liable to pay income tax under pragraph (b) :

Provided further that any company shall not be liable to pay income tax under paragraph (b) on an amount equal to the amount of any gross dividend distributed by such company in any year of assessment to a company or body of persons who or which is exempt from income tax under paragraph (a) of section 8 ; or

(c)

an amount equal to fifteen per centum of the aggregate amount of the gross dividend distributed to any non-resident person by a quoted public company in that year of assessment out of the profits on which the taxable income of such company is computed for any year of assessment ;

(d)

in the case of any public corporation not less than seventy-five per centum of the capital of which is provided by the Government, other than by way of loan, for any year of assessment, an amount equal to twenty-five per centum of the balance of its profits after deducting therefrom the income tax payable for that year of assessment under paragraph (a) :

Provided that where the aggregate amount of any gross dividend distributed in that year of assessment out of the profits on which the taxable income of such corporation is computed for any year of assessment

(i)

is not less than twenty-five per centum of such balance, the provisions of this paragraph shall not apply ; and

(ii)

is less than twenty-five per centum of such balance, the tax to which such public corporation is liable under this paragraph, for the relevant year of assessment, shall be an amount equal to the exceses of twenty-five per centum of such balance over such amount of such dividend.

For the purposes of this paragraph, the profits of the

Insurance Corporation Ltd of Sri Lanka shall be deemed not to include its profits from the business of life insurance.

(2)

Where for any year of assessment the taxable income of a company includes any capital gain arising from the change of ownership of any property, the provisions of subsection (4) and subsection (5) of section 32 shall, mutatis mutandis, apply to the taxation of that capital gain.

(3)

For the purposes of subsection (1) “amount of gross dividends” of a company means—

(i)

where a deduction under section 61 is made by the company in respect of its dividend, the amount of the dividend before such deduction is made ;

(ii)

where no such deduction is made by the company in respect of its dividend, the amount of the dividend increased by seventeen and eleven-seventeenth per centum.

Read on from s 54