As enacted

Contents

53. Amendment of the Third Schedule to the principal enactment

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

The Third Schedule to the principal enactment is hereby amended as follows:-

(1)

in subparagraph (ii) of paragraph (d) of that

Schedule, by the substitution for the words “by the

Commissioner-General;”, of the words “by the

Commissioner-General or a regulated provident fund;”;

(2)

by the insertion immediately after paragraph (h) of that Schedule, of the following new paragraph: -

“(hh) a gain made by a person on or after April 1,

2021 from the realisation of land or building which was sold, exchanged or transferred to a real estate investment trust listed in the

Colombo Stock Exchange and licensed by the Securities and Exchange Commission of Sri Lanka;”;

(3)

by the repeal of paragraph (i) of that Schedule and the substitution therefor, of the following: -

“(i) the interest accruing to or derived by-Act, No. 10 of 2021

(i)

a charitable institution, where it is proved to the satisfaction of the Commissioner-General that such interest is applied solely for the purpose of providing care to children, the elderly or the disabled in a home maintained by such charitable institution;

(ii)

any person outside Sri Lanka on any loan granted to any person in Sri Lanka or to the

Government of Sri Lanka by such person;

(iii)

any person on moneys lying to his credit in foreign currency in any foreign currency account opened by him or on his behalf, in any commercial bank or in any specialized bank, with the approval of the Central Bank of Sri Lanka, on or after January 1, 2020;

(iv)

any person from a term deposit account titled as “Special Deposit Account” opened and maintained with an authorized dealer in Sri

Lanka as prescribed by regulations made by the Minister under section 29 read with section 7 of the Foreign Exchange Act, No.

12 of 2017, (excluding the subsequently renewed accounts), either in any designated foreign currency or in Sri Lanka Rupees on or after April 8, 2020;

(v)

any welfare society, on or after April 1, 2021;

In this subparagraph, “welfare society” means a fund or a society which has been set up or formed for the welfare of its members or their respective families and contributions are made by its members, including benevolent fund which promotes the savings of members, but other than any company which is incorporated or registered under any law in force in Sri

Lanka or elsewhere and a partnership;

Act, No. 10 of 2021

(vi)

any multi-national company on any deposit opened and maintained in foreign currency in any domestic bank, if such deposit is maintained to cover its import expenditure for that year of assessment, on or after April 1,

2021;

In this subparagraph, “multi-national company” means a company that is part of a group of associated companies, with business establishments in two or more countries;”;

(4)

by the repeal of paragraphs (k) and (l) of that

Schedule, and the substitution therefor of the following:–

“(k) any sum received by-

(i)

any person from the President’s Fund established by the President’s Fund

Act, No. 7 of 1978 or the National

Defence Fund established by the

National Defence Fund Act, No. 9 of 1985;

(ii)

any Public Corporation out of the funds voted by Parliament from the

Consolidated Fund or out of any loan arranged through the Government;

(l)

any income earned by-

(i)

any non-resident person other than a

Sri Lankan permanent establishment by way of interest, discount or realization of any gain on any sovereign bond denominated in local or foreign currency:

Act, No. 10 of 2021

(ii)

any person by way of interest or discount paid or allowed, as the case may be, on any sovereign bond denominated in foreign currency, including Sri Lanka Development

Bonds, issued by or on behalf of the Government of Sri

Lanka;”;

(5)

by the insertion immediately after paragraph (l) of that Schedule, of the following new paragraphs: -

“(ll)

a gain from the realisation of Sri Lanka international sovereign bonds issued by or on behalf of the Government of

Sri Lanka and received or derived by a commercial bank or authorized dealer who made an aggregate investment not less than USD 100 million in such bonds on or after April 1, 2021;

(lll)

interest or discount accrued or derived on or after April 1, 2021 by any

Samurdhi community-based banks established under the Department of

Samurdhi Development from security or treasury bonds under the Registered

Stocks and Securities Ordinance

(Chapter 420) or treasury bills under the Local Treasury Bills Ordinance

(Chapter 417);”;

(6)

in paragraph (o) of that Schedule, by the substitution for the words “a dividend paid”, of the words and figures “prior to January 1, 2020, a dividend paid”;

(7)

by the insertion immediately after paragraph (o) of that Schedule, of the following new paragraph: -

“(oo)

on or after January 1, 2020, a dividend paid by a resident company-Act, No. 10 of 2021

(i)

to a member to the extent that such dividend payment is attributable to, or derived from, gains and profits from dividend received by that resident company;

(in this paragraph, “gains and profits from dividend” means the dividend received by that company after the deduction of expenses or losses, if any, subject to the provisions of this Act and income tax paid or payable on such dividend received by that company);

(ii)

to a member who is a non-resident person;

(iii)

which is engaged in any one or more of the following businesses in accordance with the provisions of Part IV of the

Finance Act, No. 12 of 2012 and which has entered into an agreement with the

Board of Investment of Sri Lanka established under the Board of

Investment of Sri Lanka Law, No. 4 of 1978: -

(iiia)

entrepot trade involving import, minor processing and re-export;

(iiib)

offshore business where goods can be procured from one country or manufactured in one country and shipped to another country without bringing the same into Sri Lanka;

(iiic)

providing front-end services to clients abroad;

Act, No. 10 of 2021

(iiid)

headquarters operations of leading buyers for management of financial supply chain and billing operations;

(iiie)

logistics services including bonded warehouse or multi-country consolidation in Sri

Lanka;”;

(8)

in paragraph (r) of that Schedule, by the substitution for the words “by a resident company”, of the words

“by any person”;

(9)

by the insertion immediately after paragraph (r) of that Schedule, of the following new paragraph: -

“(rr) dividends and gains on the realisation of units or amounts derived as gains from the realisation of capital assets of a business or investment by a unit holder, from real estate investment trust listed in the Colombo

Stock Exchange and licensed by the

Securities and Exchange Commission of

Sri Lanka;”;

(10)

by the addition immediately after paragraph (s) of that Schedule, of the following new paragraphs: -

“(t)

any amount derived on or after April 1, 2018, by any non-resident person as any payment for air craft, software licences or as for other related services from the Sri Lankan Airlines

Limited;

(u)

the gains and profits earned or derived by any person from-

(i)

the sale of produce from agro farming of such person within the period of five years of assessment commencing from

April 1, 2019:

Act, No. 10 of 2021

Provided that in relation to an undertaking which consists of the production of agro farming produces and utilizing such produce to agro processing or manufacture of any product, such produce shall be deemed to have been sold for the agro processor or manufacturer at the market price prevailing at the time of such deemed sale, and the gains and profits computed on the basis of such deemed sale in relation to the agro farming shall be considered as exempt gains and profits within the period of five years of assessment commencing on April 1, 2019;

(ii)

providing information technology and enabled services on or after January 1,

2020, as may be prescribed;

(iii)

any service rendered in or outside Sri

Lanka to any person to be utilized outside Sri Lanka, where the payment for such services is received in foreign currency and remitted through a bank to Sri Lanka on or after January 1, 2020;

(iv)

any foreign source (other than gains and profits referred to in subparagraph (iii)) where such gains and profits are earned or derived in foreign currency and remitted through a bank to Sri

Lanka on or after January 1, 2020;

(v)

any vocational education programmes of any Vocational Education Institution which is standardized under Technical and Vocational Education and Training concept (TVET concept) and regulated by the Tertiary and Vocational

Education Commission-Act, No. 10 of 2021

(a)

if such institution has doubled its student intake of the vocational education programmes for such year of assessment compared to the student intake of such programmes in the year of assessment immediately preceding that year of assessment;

(b)

for a period of five years commencing on April 1, 2021:

Provided however, for the purpose of paragraph (a), any institution which doubled the student intake of the vocational education programmes as provided for in the first year and maintained the same student intake of such programmes of the first year for the next four years shall be deemed as an institution which fulfilled the requirement in such years;

(vi)

any business of export of gold, gems or jewellery or from the business of cutting and polishing of gems which are brought to Sri Lanka and exported after such cutting and polishing, where such gains and profits earned in foreign currency are remitted through a bank to Sri Lanka, with effect from April 1, 2021;

(v)

any amount derived on or after January 1,

2020 by-

(i)

any non-resident person from laboratory services or standards certification services;

Act, No. 10 of 2021

(ii)

any religious institution which is registered with the Ministry in charge of the subject of religious affairs, by way of grants or donations;

(w)

gains and profits received or derived from business (other than any gains from the realisation of capital assets and liabilities of the business as calculated under Chapter IV of this Act) by a person from following any new undertaking (which is not formed by splitting-up or re-construction of an existing undertaking) commenced on or after April 1,

2021, for that period, subject to the conditions contained herein: -

(i)

an undertaking which is involved in the sale of construction materials recycled in a selected separate site established in

Sri Lanka to recycle the materials which were already used in the construction industry, (a person who is involved in the provision of construction services using construction materials recycled by him from a site with the same conditions, in the provision of such services provided by him shall be deemed to have sold such materials for the construction service at a market price prevailing at the time of such deemed sale), for a period of ten years;

(ii)

any business commenced on or after

April 1, 2021 by an individual after successful completion of vocational education from any Vocational

Education Institution which is standardized under Technical and

Vocational Education and Training concept (TVET concept) and regulated by the Tertiary and Vocational Education

Commission, for a period of five years;

Act, No. 10 of 2021

(iii)

an undertaking commenced by a resident person for the purpose of manufacturing of boats or ships in Sri Lanka and received or derived any gains and profits from the supply of such boats or ships, for a period of seven years;

(iv)

any renewable energy project established with a capacity to produce not less than one hundred Mega Watts of solar or wind power and supplied such power to the national grid, for a period of seven years;

(v)

an undertaking commenced on or after

January 1, 2021 by any resident person who constructs and installs communication towers and related appliances using local labour and local raw materials in Sri Lanka or provides required technical services for such construction or installation, for a period of five years;

(vi)

an undertaking for letting bonded warehouses or warehouses related to the offshore business in the Colombo and

Hambanthota Ports, if such person has invested on such undertaking on or after

April 1, 2021;

Tax exemption periods provided in the above subparagraphs (other than in subparagraph (vi)) shall be reckoned from the year of assessment in which the undertaking commences to make profits (assessable income from such business) from transactions entered into in that year of assessment or from the commencement of the year of assessment immediately succeeding the year of assessment in which the undertaking completes a period of two years reckoned from the date on which the undertaking commences to carry on commercial operations, whichever occurs earlier.”.

Act, No. 10 of 2021

Read on from s 54