20. Insertion of new sections 38A, 38B, 38C and 38D in the principal enactment

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

The following new sections are hereby inserted immediately after section 38 of the principal enactment and shall have effect as section 38A, section 38B, section 38C and section 38D of that enactment:—

Inland Revenue (Amendment)

38A.

“Rate of income tax on profits and income of any foreign currency banking unit arising from any off-shore foreign currency transaction

The profits and income of any foreign currency banking unit arising from any off-shore foreign currency transaction shall, for any year of assessment commencing on or after

April 1, 2004, be liable to income tax at the appropriate rate given in the Sixth Schedule to this Act.

For the purposes of this section, any foreign currency transaction which any foreign currency banking unit enters into with any other foreign currency banking unit, shall be deemed to be an “off-shore transaction”.

38B.

Rate of income tax on profits and income arising in Sri Lanka to the consignor or consignee from certain exports

The profits and income arising in Sri

Lanka to a consignor or consignee, from the export of -

(a)

any precious stones or metals not mined in Sri Lanka ;

(b)

any petroleum, gas or petroleum products ; or

(c)

such other products as may be approved by the Minister for the purposes of this paragraph, having regard to the foreign exchange benefits that are likely to accrue to the country from the export of such products, being goods brought to Sri Lanka on a consignment basis, and re-export without subjecting such goods to any process of manufacture, shall for any year of assessment commencing on or after April 1, 2004 be liable to income tax at the appropriate rate given in the Sixth Schedule to this Act.

Inland Revenue (Amendment)

38C.

Rate of income tax on profits and income arising from certain undertakings approved by Minister

The profits and income arising to any person from an undertaking approved by the

Minister for the operation and maintenance of facilities for the storage of goods or commodities brought into Sri Lanka for re-export, shall for any year of assessment commencing on or after April 1, 2004, be liable to income tax at the appropriate rate given in the Sixth Schedule to this Act.

38D.

Rate of income tax on sale of any share or a warrant

The profits from the sale of any share of a person, other than a unit trust or a mutual fund, including a right to any share or a bonus share or a warrant for any year of assessment commencing on or after April 1, 2004, where such profits derived by or accruing to such person from such sale has taken place within two years from the date of acquisition, be liable to tax at the appropriate rate given in the Sixth

Schedule to this Act.

For the purposes of this section “profits”, includes gains and shall be computed, after deducting any expenditure allowable under section 23 dierctly related to the disposal of such shares and the cost of acquisition of such shares, from the sale preceeds, and shall be the net profit or gain for that year, after deducting losses incurred in the same year from the disposal of shares, rights or warrants, calculated in the same manner as mentioned above, had such loss been a profit or gain would have been liable to tax under this paragraph, have been held for a period not exceeding twenty four months by such person, and in the event that the sale comprises shares of the same company, acquired on different dates, the cost of such shares or the period of ownership shall be determined on a first in first out basis of such

Inland Revenue (Amendment)

shares. Any excess of such deductible loss over the profits or gain for any year may be carried forward to the succeeding year and so on, and deducted in computing the net profits or gains under this paragraph.”.

Read on from s 21