Act of Parliament · As enacted
Inland Revenue (Amendment) Act 2013
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
This Act may be cited as the Inland Revenue
(Amendment) Act, No. 18 of 2013.
The provisions of this Act, shall come into operation on April 1, 2013:
Provided however that–
the amendments made to section 16C of the Inland
Revenue Act, No.10 of 2006 (hereinafter referred to as the “principal enactment”) by section 7(2) of this Act;
the amendments made to section 16D of the principal enactment by section 8 of this Act; and
the amendments made to section 17A of the principal enactment by section 10(4) of this Act, shall be deemed for all purposes to have come into operation on April 1, 2012.
s 2Amendment of section 7 of the principal enactment
Section 7 of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended as follows :-
in paragraph (b) of that section –
by the substitution in sub-paragraph (lxii), for the words and figures “Certified
Management Accountants of Sri Lanka Act,
No. 23 of 2009; and”, of the words and figures
“Certified Management Accountants of Sri
Lanka Act, No. 23 of 2009;”;
by the substitution in sub-paragraph (lxiii), for the words and figures “the National Child
Protection Authority Act, No. 50 of 1998.”, of the words and figures “the National Child
Protection Authority Act, No. 50 of 1998;”;
and
by the addition, immediately after sub-paragraph (lxiii), of the following new sub-paragraphs :-
“(lxiv)
College of General Practitioners of
Sri Lanka established by the College of General Practitioners of Sri Lanka
Act, No. 26 of 1974;
Sri Lanka Social Security Board established by the Sri Lanka Social
Security Board Act, No. 17 of 1996;
any Public Corporation to the extent of provision of services on behalf of the Government of Sri Lanka, free of charge out of the funds voted by
Parliament from the Consolidated
Fund or out of any loan arranged through the Government;
Sri Lanka Savings Bank Limited incorporated under the Companies
Act, No. 7 of 2007, which is merged with the National Development
Trust Fund (NDTF);
Lanka Puthra Development Bank
Limited incorporated under the
Companies Act, No. 17 of 1982; and
any Government assisted private school other than that incorporated under the Companies Act, No.7 of
2007 which is registered with the
Ministry of Education and mandated to follow the Government curricula set by the Ministry of Education and the circulars issued by such
Ministry.”.
by the substitution in paragraph (k) of that section, for the words “dividend to the Government.”, of the words “dividend to the Government;”; and
by the addition immediately after paragraph (k) of that section, of the following new paragraph:—
“(l)
the profits and income for any year of assessment commencing on or after April 1,
2013, of Sri Lanka Deposit Insurance Scheme established by regulation made under the
Monetary Law Act (Chapter 422).”.
s 3Amendment of section 8 of the principal enactment
Section 8 of the principal enactment as last amended by Act, No. 22 of 2011 is hereby further amended in subsection (1) as follows :-
by the insertion immediately after paragraph (dd) of that subsection, of the following new paragraph :-
“(ddd)
the emoluments arising in Sri Lanka of any individual who is an expert and who is not a citizen and is brought to and employed in
Sri Lanka by any undertaking for the purposes of that undertaking, being an undertaking with which an agreement has been entered into by the Board of Investment of Sri Lanka and invested more than US $ 50
Million as direct foreign investment made on or after April 1, 2013, during the period of its tax holiday under section 17A or section 16D as the case may be, and if it is confirmed by the Board of Investment of Sri Lanka that the service rendered by him in carrying out activities of such undertaking in Sri Lanka is essential and such service is not obtainable from Sri Lanka:
Provided that the number of experts in an undertaking to whom this provision is applicable shall not exceed five.
For the purpose of this paragraph “expert”
means an individual who has expertise in such field as may be determined by the Commissioner - General on the recommendation made by the Board of
Investment of Sri Lanka, as being a field in which sufficient expertise is not available among the citizens of Sri Lanka;” ;
by the substitution in paragraph (t) of that subsection for the words “exceeds five hundred thousand rupees, then-” of the words and figures
“exceeds five hundred thousand rupees, for any year of assessment commencing prior to April 1, 2013, then-”; and
by the substitution in paragraph (w) of that subsection for the words “one hundred thousand rupees,”, of the words and figures “one hundred thousand rupees, for any year of assessment commencing prior to April 1, 2013,”.
s 4Amendment of section 9 of the principal enactment
Section 9 of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended as follows:-
by the insertion immediately after paragraph (a) of that section, of the following new paragraph :-
“(aa)
the interest accruing to any person or partnership or other body of persons outside
Sri Lanka from investment made out of foreign currency brought in to Sri Lanka on or after April 1, 2012, in any security or bond issued by any person in Sri Lanka;”; and
by the addition immediately after paragraph (n) of that section, of the following new paragraph:-
“(o)
the interest or discount accruing or arising to any person from any investment made on or after January 1, 2013-
in any Corporate Debt Security, quoted in any Stock Exchange licensed by the
Securities and Exchange Commission;
and
in any Municipal Bond issued by any
Municipal Council with the approval of the Secretary of the Ministry of
Finance.”.
s 5Amendment of section 13 of the principal enactment
Section 13 of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended as follows :-
by the insertion immediately after paragraph (bb)
of that section, of the following new paragraph:-
“(bbb)
the profits and income earned in foreign currency by any person for any year of assessment commencing on or after April 1, 2012, in respect of any business of procuring goods from one country or manufacturing goods in one country and exporting to another country, other than
Sri Lanka;” ;
by the insertion immediately after paragraph (dddd)
of that section, of the following new paragraph :-
“(ddddd)
any profits and income earned in foreign currency from outside Sri Lanka, by any resident individual who is a citizen of
Sri Lanka, if such profits and income (less such amount, if any, expended outside Sri
Lanka as is considered by the
Commissioner-General to be reasonable expenses) are remitted to Sri Lanka through a bank;”;
by the insertion immediately after paragraph (xxxxxx) of that section, of the following new paragraphs:-
“(xxxxxxx)
any profits and income from any investment made on or after January 1, 2013 -
in any Corporate Debt Security, quoted in any Stock Exchange licensed by the Securities and
Exchange Commission;
in any Municipal Bond issued by any Municipal Council with the approval of the Secretary of the
Ministry of Finance;
(xxxxxxxx)
the interest earned by the DFCC Bank established by the Development Finance
Corporation of Ceylon Act, No. 35 of 1955
and National Development Bank PLC incorporated under the Compaines Act,
No. 7 of 2007, from moneys lent out of funds raised from outside Sri Lanka to
Small and
Medium enterprises, plantaions, construction industry or other manufacturing industries.”;
by the insertion immediately after paragraph
(yyyyyy) of that section, of the following new paragraph :-
“(yyyyyyy)
any royalty, franchising fee or any payment for designing received by any foreign collaborator from a company registered with the Board of
Investment, during the period of tax holiday under section 17A or section 16D as the case may be, where the investment made in Sri Lanka from foreign direct investment raised outside Sri Lanka exceeds US $ 50
Million and if such services are considered by the Director General of the Board of Investment to be essential in carrying out activities in
Sri Lanka and is not obtainable in
Sri Lanka;”;and
by the insertion immediately after paragraph (zzzzzz)
of that section, of the following new paragraph :-
“(zzzzzzz)
where an individual who is a citizen of Sri Lanka, employed abroad returns to the country on or after January 1,
2013 and invests his earnings from employment abroad to commence any business of manufacture of any article, other than liquor or tobacco products, or provision of any service, the profits and income of such person from such business for a period of five years commencing from the beginning of the year of assessment in which the commercial operations of such business commenced.”.
s 6Amendment of section 15 of the principal enactment
Section 15 of the principal enactment is hereby amended by the substitution for all the words from “exempt from income tax,” to the end of that section, of the following words and figures:-
“exempt from income tax-
for any year of assessment commencing prior to April 1, 2013, if such individual is a citizen of both Sri Lanka and any other country;
for any year of assessment commencing on or after April 1, 2013, if such individual is a citizen of Sri Lanka and—
citizen of any other country; or
has obtained permanent resident status or similar status in any other country under which such individual may obtain citizenship in such country, at the time of such arrival and during the whole of such stay.”.
s 7Amendment of section 16c of the principal enactment
Section 16C of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended as follows:-
in Column 1 of the Schedule of subsection (1) of that section by the substitution for the words and figures “Any activity referred to in paragraph (a) of subsection (2), but not including services relating to agriculture (products shall be with a minimum of 35% value addition, if more than 50% of the production is to be sold in the domestic market)”, of the words and figures “Any activity referred to in paragraph (a) of subsection (2).
In case of manufacture of any article, such article shall be with a minimum of 35% value addition, if more than 50% of the production is to be sold in the domestic market.”; and
in subsection (2) of that section –
by the substitution in paragraph (b) of that subsection for the words and figure “Schedule to subsection (1); and” of the words and figure
“Schedule to subsection (1);”;
by the substitution in paragraph (c) of that subsection, for the words and figures “after
April 1, 2011.” of the words and figures “after
April 1, 2011; and”;
by the insertion immediately after paragraph (c) of that subsection, of the following new paragraph;-
“(d)
which is not formed by the splitting up or reconstruction or acquisition of any business which was previously in existence.”.
s 8Amendment of section 16D of the principal enactment
Section 16D of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended by the substitution for the words “whichever occurs earlier.”, of the words “whichever occurs earlier where such undertaking is not formed by the splitting up or reconstruction or acquisition of any business which was previously in existence.
For the purposes of this section “the investment” means the cost of any land, plant, machinery, equipment and other fixed assets.”.
s 9Insertion of new section 16E in the principal enactment
The following new section is hereby inserted immediately after section 16D of the principal enactment and shall have effect as section 16E of that enactment :-
16E. The profits and income within the meaning of paragraph (a) of section 3 (other than any profits and income from the disposal of any capital asset) of any person or partnership-
from any undertaking of cultivating any renewable energy crop in Sri
Lanka, for a period of ten years;
from all transactions connected with manufacturing, distribution and marketing of organic fertilizers, commencing on or after April 1, 2013, shall be exempt from income tax.”.
“Exemption of profits and income from cultivation of any renewable energy crops and transactions connected with manufacturing, distribution and marketing of organic fertilizer.
s 10Amendment of section 17A of the principal enactment
Section 17A of the principal enactment, as last amended by Act, No. 8 of 2012 is hereby further amended in subsection (2) of that section as follows :-
by the substitution in sub-paragraph (ii) of paragraph (a) of that subsection, for the words
“apparels,”, of the words “apparels and textile,”;
by the substitution in sub-paragraph (xxvii) of paragraph (a) of that subsection, for the words
“national economy; and” , of the words “national economy;”;
by the substitution in paragraph (b) of that subsection, for the words and figures “on or after
April 1, 2011.”, of the words and figures “on or after
April 1, 2011; and”; and
by the insertion immediately after paragraph (b) of that subsection, of the following new paragraph:-
“(c)
which is not formed by the splitting up or reconstruction or acquisition of any business which was previously in existence.
For the purpose of this section “the investment” means the cost of any land, plant, machinery, equipment and other fixed assets.”.
s 11Amendment of section 25 of the principal enactment
Section 25 of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended in subsection (1) of that section as follows :-
by the substitution in paragraph (d) of the proviso to paragraph (a) of that subsection for the words
“the rate shall be fifty per centum of the cost of acquisition;”, of the words “the rate shall be fifty per centum of the cost of acquisition”:
Provided that where such high tech plant, machinery or equipment acquired on or after April
1, 2013 and used in any trade or business meets more than thirty per centum of the total requirement of the power generation of that trade or business out of alternative energy sources, the rate shall be one hundred per centum on the cost of acquisition;
For the purpose of this proviso “alternative energy source” means any source other than the
National Grid, that generates power.”;
by the addition immediately after paragraph (d) of the proviso to paragraph (a) of that subsection, of the following new paragraphs:-
“(e)
where any plant or machinery or equipment is acquired and used in any business on or after April 1, 2013 for technology upgrading purposes or introducing any new technology, the rate shall be fifty per centum of the cost of acquisition;
where any plant, machinery or equipment is acquired and used on or after April 1, 2013 in any Stock Broker Company for the upgrading of information technology infrastructure to be in compliance with the requirements of the Colombo Stock
Exchange licensed by the Securities and
Exchange Commission, in relation to the
Risk Management System,the rate shall be one hundred per centum of the cost of acquisition;
where any plant, machinery or equipment acquired and used on or after April 1, 2013, in any trade or business and where at least sixty per centum of the turnover of such trade or business is from export, the rate shall be fifty per centum of the cost of acquisition;”;
by the substitution in paragraph (i) of that subsection, for all the words from “upgrading of any trade or business carried on” to the words
“carried out through any Government institution;”, of the following words and figures:-
“upgrading of any trade or business carried on by such person:
Provided that-
(A)
where such expenditure is incurred on or after April 1, 2012 but prior to April 1,
2013 and such research is carried out through any Government institution;
(B)
where such expenditure is incurred on or after April 1, 2013 and such research is carried out through any institution in
Sri Lanka, the deduction shall be an amount equal to three hundred per centum of such expenditure incurred by such person”; and
by the addition immediately after paragraph (t) of that subsection, of the following new paragraph :-
“(u)
any sum paid by a Public Corporation or
Government Owned Business Undertaking as a special levy, to the Government.”.
s 12Amendment of section 26 of the principal enactment
Section 26 of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended in paragraph (v) of subsection (1) of that section, by the substitution for the words “carried on or exercised by him other than”, of the words and figures “carried on or exercised by him other than the cost of advertisement incurred on or after August 1,
2012, on sponsorship of international sport events approved by the Minister to whom the subject of Sports has been assigned; or”.
s 13Amendment of section 34 of the principal enactment
Section 34 of the principal enactment as last amended by Act, No.8 of 2012 is hereby further amended as follows:-
in subsection (2) of that section, by the insertion immediately after paragraph (t) of that subsection, of the following new paragraphs:-
“(u) where the profits from employment of any individual who is a citizen of Sri Lanka or resident in Sri Lanka other than profits referred to in paragraph (c) of subsection (1)
of section 4, exceeds five hundred thousand rupees, for any year of assessment commencing on or after April 1, 2013, then-
such part of such profits in excess of five hundred thousand rupees; or
one hundred thousand rupees, whichever is lower;
such part of official emoluments as does not exceed one hundred thousand rupees for any year of assessment commencing on or after
April 1, 2013, arising in Sri Lanka to any individual who is not a citizen of Sri Lanka and not resident in Sri Lanka.”; and
in subsection (4) of that section, by the substitution in sub-paragraph (i) of paragraph (a) of that subsection for the words and figures “other than those referred to in paragraphs (a), (b), (c), (e), (g), (gg), (h), (i), (j), (k), (n), (o), (q),(r), (s) and (t) of subsection (2)”, of the words and figures “other than those referred to in paragraphs (a), (b), (c), (e), (g), (gg), (h), (i), (j), (k), (n), (o), (q),(r), (s), (t),(u) and (v) of subsection (2)”.
s 14Amendment of section 40A of the principal enactment
Section 40A of the principal enactment as last amended by Act, No.19 of 2009 is hereby further amended by the substitution for the words “twenty per centum”
wherever such words occur in that section, of the words
“sixteen per centum”.
s 15Amendment of section 40B of the principal enactment
Section 40B of the principal enactment as last amended by Act, No.19 of 2009 is hereby further amended by the substitution for the words “twenty per centum”
wherever such words occur in that section, of the words
“sixteen per centum”.
s 16Insertion of new section 46A in the principal enactment
The following new section is hereby inserted immediately after section 46 of the principal enactment and shall have effect as section 46A of that enactment:-
46A. Where the taxable income of any person for any year of assessment includes any profits and income within the meaning of paragraph (a) of section 3 (other than any profits and income from the disposal of any capital asset) from poultry farming, such part of such taxable income as consists of such profits and income shall, notwithstanding anything to the contrary in other provisions, be chargeable with income tax at the appropriate rate specified in the Fifth Schedule to this Act.
For the purposes of this section “profits and income from poultry farming” means such profits and income from the sale of produce by such person without subjecting such produce to any process of production or manufacture.”.
s 17Insertion of new section 48C in the principal enactment
The following new section is hereby inserted immediately after section 48B of the principal enactment and shall have effect as section 48C of that enactment:-
48C.Where any undertaking which has entered into an 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, which provides for tax concessions, and the taxation under such agreement after the expiry of the tax exemption
“Rate of income tax applicable to
BOI registered undertakings after the expiry of the period of tax exemption.
“Rates of income tax on profits from poultry farming.
“Rate of income tax on the profits and income from the sale of goods by an export oriented company.
period provided thereunder is more burdensome than the texation under the Inland
Revenue Act, the profits and income of such undertaking after the expiry of such tax exemption period shall be chargeable with income tax in accordance with the provisions of the Inland Revenue Act, provided such undertaking shall not seek any further tax concession in respect of such agreement through any supplementary agreement.”.
s 18Amendment of section 56 of the principal enactment
Section 56 of the principal enactment is hereby amended as follows:-
in subsection (2) of that section, by the substitution for the words “fifteen per centum”, of the words
“twelve per centum”; and
in subsection (3) of that section, by the substitution for the words “fifteen per centum” wherever such words occur in that subsection, of the words “twelve per centum”.
s 19Insertion of new sections 56A, 56B, 56C, and 56D in the principal enactment
The following new sections are inserted immediately after section 56 of the principal enactment and shall have effect as sections 56A, 56B, 56C and 56D respectively, of that enactment:-
56A. Such part of the profits and income of an export oriented company which has entered into an 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, for any year of assessment commencing on or after April 1, 2013, from the sale of goods manufactured in Sri Lanka, up to the quantity approved by the Board of Investment as import replacement, to-
any company which has entered into an 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, enjoying tax holiday under section 16C, 16D or 17A of this Act or under the Strategic
Development Projects Act, No.14 of 2008 and which is permitted to import project related goods or raw materials on duty free basis under the provisions of such agreement, during the project implementation period; or
any person eligible to import specific goods on duty free basis under any
Government Authority, shall notwithstanding anything to the contrary in any other provisions of this Act, be deemed to be profits and income from exports and be chargeable with income tax at the appropriate rate specified in the Fifth
Schedule to this Act.
56B.
ships
Such part of the profits and income of any person for any year of assessment commencing on or after April 1, 2013 from the supply of any goods manufactured in Sri Lanka or the provision of services, to foreign ships for payments in foreign currency, shall notwithstanding anything to the contrary in any other provisions of this Act, be deemed to be profits and income from exports and be chargeable with income tax at the appropriate rate specified in the Fifth Schedule to this Act.
56C. Such part of the profits and income of any person for any year of assessment commencing on or after April 1, 2013 from the sale of any product manufactured in Sri Lanka for payment in foreign currency through foreign exchange earning account authorized by the Central Bank of Sri Lanka, shall notwithstanding anything to the contrary in any other provisions of this Act, be deemed to
Rate of income tax on the profits and income from the supply of goods or services to foreign
Rate of income tax on the profits and income from the sale of products manufactured in Sri Lanka for payment in foreign currency.
be profits and income from exports and be chargeable with income tax at the appropriate rate specified in the Fifth Schedule to this Act.
56D. For any year of assessment commencing on or after April 1, 2013 such part of the profits and income from the sale in the local market, of locally manufactured gaments, bags made out of fabric, linen, curtains or any othe goods, of any export oriented company which exports not less than sixty per centum of its products shall be chargeble with income tax at the rate of twelve per centum:
Provided however, where the local value addition of such garments, bags, linen, curtains or other goods, as the case may be, is greater than sixty five per centum with Sri Lankan brand name, such part of the profits and income of such export oriented company from the sale in the local market, of such garments, bags, linen, curtains, or other goods shall be chargeable with income tax at the rate of ten per centum.”.
s 20Amendment of section 59B of the principal enactment
Section 59B of the principal enactment as last amended by Act, No. 8 of 2012 is hereby further amended as follows:-
in subsection (2) of that section, by the substitution for paragraph (b) of that subsection, of the following new paragraph:-
“(b) the turnover of such undertaking (other than from the sale of any capital asset) for that year of assessment-
being any year of assessment commencing on or after April 1, 2011
but prior to April 1, 2013, does not exceed three hundred million rupees;
Rate of income tax on the profits and income from the sale of locally manufactured goods in local market by export oriented companies.
being any year of assessment commencing on or after April 1, 2013, does not exceed five hundred million rupees.”;and
by the substitution for the marginal note to that section, of the following marginal note:-
“Rate of income tax applicable to the profits and income of any person from any undertaking with annual turnover not exceeding certain amount. ”.
s 21Insertion of new sections 59D and 59E in the principal enactment
The following new sections are hereby inserted immediately after section 59C of the principal enactment and shall have effect as sections 59D and 59E respectively, of that enactment:-
59D. (1) The tax rate applicable on the profits and income within the meaning of paragraph (a) of section 3 (other than any profits and income from the sale of any capital asset), of any company which lists its shares on or after April 1, 2013 but prior to April 1, 2014, in the Colombo Stock Exchange licensed by the
Securities and Exchange Commission of Sri
Lanka and issues by way of Initial Public
Offering not less than twenty per centum of its shares to the general public, shall be reduced by fifty per centum for the year of assessment in which such shares are listed and for another two years of assessment immediately succeeding that year of assessment subject where such company after listing continues to maintain not less than twenty per centum of holding of its shares by the general public.
Where the company referred to in subsection (1) fails to maintain in any subsequent year of assessment after listing its shares, not less than twenty per centum of
“Rate of income tax applicable to companies listing its shares in the
Colombo
Stock
Exchange and issuing its shares to the general public.
holding of shares by the general public in the opinion of an Assessor, the tax reduced under subsection (1) shall notwithstanding to the contrary in any other provisions of this Act, be re-assessable, payable and recoverable.
For the purposes of this section “shares held by the general public” in relation to a listed company means shares of such company held by any person other than those directly or indirectly held by :-
its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company;
its directors who are holding office as directors of such company, their spouses and children under 18 years of age;
its Chief Executive Officer, his spouse and children under 18 years of age; and
any single shareholder who holds ten per centum or more of the shares of such company.
59E.
from
Such part of the profits and income of any person or partnership from operating any project for producing any alternative energy including operating any mini hydro power project shall notwithstanding anything to the contrary in any other provisions of this Act, be taxable at the appropriate rate specified in the
Fifth Schedule to this Act.
any
For the purposes of this section “mini hydro power project” means any hydro power project which generates less than ten Mega Watts electricity.”.
Rate of income tax on the profits and income operating alternative power generation project.
s 22Amendment of section 60 of the principal enactment
Section 60 of the principal enactment as last amended by Act, No.19 of 2009 is hereby further amended as follows:-
in sub-paragraph (ii) of paragraph (a) of that section, by the substitution for the words “black tea in bulk, crepe rubber,”, of the words “black tea not in packet or package form and each packet or package weighing not more than one kilogram, crepe rubber,”; and
by the substitution for the words and figures “any other produce referred to in section 16.”, of the words and figures “any other produce referred to in section 16, but include organic tea in bulk.”.