Inland Revenue (Amendment) Act 2021 · As enacted
51. Amendment of the First Schedule to the principal enactment
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
The First Schedule to the principal enactment is hereby amended as follows: -
in paragraph 1 of that Schedule-
in subparagraph (1) of that paragraph, by the substitution for the words “for a year of assessment shall”, of the words and figures
“for a year of assessment commencing on or after April 1, 2018 but for the period prior to
January 1, 2020 shall”;
by the insertion immediately after subparagraph (1) of that paragraph, of the following new subparagraph: -
“(1A) subject to the provisions of subparagraph (2), the taxable income of a resident or non-resident individual commencing from January 1, 2020 shall be taxed at the following rates: -
Act, No. 10 of 2021
in subparagraph (2) of that paragraph-
in item (b)(i) of that subparagraph, by the substitution for the words “where the period”, of the words and figures “prior to January 1, 2020, where the period”;
in item (b)(ii) of that subparagraph, by the substitution for the words “where the period”, of the words and figures “prior to January 1, 2020, where the period”;
by the addition immediately after item (b)(ii) of that subparagraph, of the following new item: -
“(iii) on or after January 1, 2020:
Taxable income for a year of assessment
Not exceeding Rs.
million
Exceeding Rs.
million but not exceeding Rs.
million
Exceeding
Rs. 6 million
Tax payable 6%
of the amount in excess of Rs.0
Rs.
180,000
plus 12% of the amount in excess of Rs.
million
Rs.
540,000
plus 18% of the amount in excess of Rs.
million”;
Act, No. 10 of 2021
in subparagraph (3) of that paragraph-
by the substitution for the words and the figure
“referred to in subparagraph (2) shall be-”, of the words and the figure “referred to in item (b)
of subparagraph (2) shall be-”;
in item (c) of that subparagraph, by the substitution for the words “by the employer;”
of the words “by the employer; and”;
by the repeal of items (d) and (e) of that subparagraph; and
by the re-lettering of item (f) of that subparagraph, as item (d) thereof;
in subparagraph (4) of that paragraph, by the substitution for the words “liquor or tobacco.”, of
Total income from employment referred to in subparagraph (3) for a year of assessment
Not exceeding Rs.
10,000,000
Exceeding
Rs. 10,000,000 but not exceeding
Rs. 20,000,000
Exceeding
Rs. 20,000,000
Tax payable 0% of the amount in excess of Rs.0 6% of the amount in excess of
Rs.10,000,000
Rs. 600,000 plus 12% of the amount in excess of
Rs. 20,000,000”;
Act, No. 10 of 2021
the words “manufacture and sale or import and sale of any liquor or tobacco product.”;
by the addition immediately after subparagraph (4)
of that paragraph, of the following new subparagraph: -
“(5) Notwithstanding anything to the contrary in the provisions of subparagraph (1A), an individual’s following gains and profits shall be taxed at the maximum rate of 14% with effect from
April 1, 2021:–
consideration received in respect of gems and jewellery;
amounts received on the supply of electricity to national grid generated by using renewable energy resources by any individual.”;
by the repeal of paragraph 2 of that Schedule and the substitution therefor, of the following paragraph: -
“2. Tax rate for partnerships.
Subject to the provisions of subparagraph (2), the taxable income of a partnership shall be taxed at the following rates with effect from January 1, 2020: -
Taxable income for a year of assessment
Not exceeding
Rs. 1,000,000
Exceeding
Rs. 1,000,000
Tax payable 0%
of the amount in excess of Rs.0 6%
of the amount in excess of
Rs.1,000,000
Act, No. 10 of 2021
Where a partnership’s taxable income includes gains from the realisation of investment assets, then-
those gains shall be taxed to the partnership at the rate of 10%; and
only the remainder of the partnership’s taxable income shall be taxed at the rate referred to in subparagraph (1).”;
in subparagraph (1) of paragraph 3 of that Schedule, by the substitution for the words and figures “taxed at the rate of [24%.]”, of the words and figures
“taxed at the rate of 24% prior to January 1, 2020
and 18% with effect from January 1, 2020.”;
in paragraph 4 of that Schedule-
by the repeal of subparagraph (1) of that paragraph and the substitution therefor, of the following: -
“(1) Subject to subparagraphs (2), (2A)
and (3), the taxable income of a company for a year of assessment-
prior to January 1, 2020 shall be taxed at the rate of 28%;
with effect from January 1, 2020
shall be taxed at the rate of 24%.”;
in subparagraph (2) of that paragraph, by the substitution for the words “for a year of assessment”, of the words and figures “for a year of assessment prior to January 1, 2020”;
by the insertion immediately after subparagraph (2) of that paragraph, of the following new subparagraph: -
“(2A) Such part of the gains and profits of a company for a year of assessment shall be taxed at the following rates with effect from January 1, 2020:-
Act, No. 10 of 2021
gains and profits from the business of a
Small and Medium Enterprise, excluding such gains and profits from a business of betting and gaming or from the sale of liquor (in the case of liquor, other than those gains and profits from a business which is merely incidental to another business)- 14%;
gains and profits from conducting a business of sale of goods or merchandise including export of goods, where the payment for such sale or export is received in foreign currency and remitted through a bank to Sri
Lanka-14%;
gains and profits of a specified undertaking-14%;
gains and profits from providing educational services-14%;
gains and profits of an undertaking for the promotion of tourism-14%;
gains and profits from providing construction services-14%;
gains and profits from agro processing-
14%;
gains and profits from providing health care services-14%;
gains and profits from dividends received from a resident company-14%;
Act, No. 10 of 2021
gains and profits derived by any export company which is registered with the
Board of Investments of Sri Lanka established by the Board of Investment of Sri Lanka Law, No. 4 of 1978 from the consideration received in respect of health protective equipment and similar products supplied to the
Ministry of Health, Department of
Health Services, Sri Lanka Army, Sri
Lanka Navy, Sri Lanka Airforce, Sri
Lanka Police and COVID Center- 14%;
gains and profits of any company (even though a higher rate of income tax is applicable as provided under this Act or under any other written law) which lists its shares on or after January, 1 2021, but prior to December 31, 2021, in the Colombo Stock Exchange licensed by the Securities and Exchange
Commission of Sri Lanka, for three years of assessment commencing from April 1, 2022 -14%;
gains and profits from the consideration received in respect of gems and jewellery – 14%;
with effect from April 1, 2021, gains and profits from the supply of electricity to national grid generated using renewable energy resources by a company – 14%;
subject to item (a), (b), (c), (j) or (k) of this subparagraph, gains and profits from manufacturing-18%;
gains and profits from conducting betting and gaming-40%;
gains and profits from the manufacture and sale or import and sale of any liquor or tobacco product-40%.”;
Act, No. 10 of 2021
by the addition immediately after subparagraph (4) of that paragraph, of the following new subparagraph: -
“(5) The income tax payable by a company, calculated in accordance with subparagraphs (1), (2A), (3) and (4) of paragraph 4 of this Schedule shall be reduced as follows: -
aggregate income tax payable by any company (including income tax payable calculated on the basis and tax rate provided in any 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, but other than on gains from the realisation of investment asset) which lists its shares on or after January 1, 2021, but prior to
December 31, 2021, in the
Colombo Stock Exchange licensed by the Securities and
Exchange Commission of Sri
Lanka, shall be reduced by fifty per centum for the year of assessment commencing from
April 1, 2021;
such part of income tax payable on gains and profits from dividends by any multi-national company shall be reduced by twenty-five per centum for the year of assessment commencing from
April 1, 2021 and fifty per centum for the two years of assessment immediately succeeding that year
Act, No. 10 of 2021
of assessment, subject to the condition that there shall be-
an increase in exports (other than specified undertakings)
by thirty per centum in the year of assessment commencing from April 1,
2021, compared to the immediately preceding year of assessment (hereinafter referred to as the “first year”);
or
an increase in exports (other than specified undertakings)
by fifty per centum in the year of assessment commencing from April 1,
2022, compared to the first year and maintains such status in the subsequent year of assessment.”;
in paragraph 5 of that Schedule-
in subparagraph (1) of that paragraph, by the substitution for the words and figures “taxed at the rate of [28%].”, of the words and figures “taxed at the rate of 28% prior to January 1, 2020 and 24% with effect from January 1, 2020.”;
in subparagraph (2) of that paragraph, by the substitution for the words “realisation of capital assets”, of the words “realisation of investment assets”;
in paragraph 7 of that Schedule-Act, No. 10 of 2021
in subparagraph (1) of that paragraph, by the substitution for the words and figures “taxed at the rate of [28%].”, of the words and figures
“taxed at the rate of 28% prior to January 1,
2020 and 24% with effect from January 1, 2020.”;
in subparagraph (3) of that paragraph, by the substitution for the words and figures “taxed at the rate of [28%].”, of the words and figures
“taxed at the rate of 28% prior to January 1,
2020 and 24% with effect from January 1, 2020.”;
in the heading of paragraph 8 of that Schedule, by the substitution for the words “Provident or Pension
Funds” of the words “Provident, Pension or Gratuity
Funds”;
in subparagraph (1) of paragraph 10 of that
Schedule-
in item (c)(ii) of that subparagraph, by the substitution for the words and figures “14%;
and”, of the figures “14%;”;
in item (c)(iii) of that subparagraph, by the substitution for the figures “14%.”, of the word and figures “14%; and”;
by the addition immediately after item (c)(iii) of that subparagraph, of the following new item: -
“(iv)
in the case of payments referred to in section 85(1A)-
(iva)
interest or discount paid-5%;
(ivb)
all other payments- 14%.”;
by the addition immediately after paragraph 10 of that Schedule, of the following new paragraphs: -
Act, No. 10 of 2021
“11. Tax rate for persons who engage in agro farming together with agro processing or manufacturing.
Where a person utilizes agro farming produce produced by him for his agro processing or manufacturing business activity in Sri Lanka, such portion of the tax payable in respect of such agro processing or manufacturing business activity that corresponds to the proportion of the farming produce produced by him to the total farming produce utilized in such agro processing or manufacturing, shall be reduced by twenty-five per centum, for the period of five years of assessment commencing on April 1, 2021.
12. Application of tax rates for different gains and profits.
Where a person’s taxable income consists of different sources of income or gains and profits from different business activities, the income tax rates applicable to each such source of income or such gains and profits from such different business activities shall be applied to such source of income or such gains and profits.”.