Act of Parliament · As enacted
Inland Revenue (Amendment) Act 2023
Official English translation. The Sinhala text prevails.
Official translationFrom Department of Government Printing, unchanged
This Act may be cited as the Inland Revenue
(Amendment) Act, No. 4 of 2023.
The provisions of this section and sections 2, 4, 7, 8,
9, 11, 13, 15, 16, 19 and 22 of this Act shall come into operation on the date on which the Bill becomes an Act of
Parliament.
The provisions of this Act specified in Column I of the table below which amend the provisions of the Inland
Revenue Act, No. 24 of 2017 (hereinafter referred to as the
“principal enactment”) specified in Column II of that table, shall come into operation or be deemed to have come into operation, as the case may be, on the respective dates as specified in Column III of that table.
Section
Section of the principal enactment
Date of of this Act which is amended operation 3 37(1)(b) 01.04.2021 5 84A(1B) 01.01.2023 6 85(4) 01.01.2023 10 113(1)(b), 113(1)(bb), 113(1A), 01.04.2023 113(1B) and 113(1C)
12 135(3), 135(3A) and 135(4) 01.04.2023
Table
Column I
Column II
Column III
150(1)(a), 150(1)(b), 150(1)(c) 01.04.2023
and 150(2A)
17 195 01.04.2018 18
subparagraph (1) of paragraph 4, 01.10.2022
item (d)(iii) of subparagraph (1)
of paragraph 10 and paragraph 13 of the First Schedule 20
paragraph (gg) of the Third 01.04.2022
Schedule 20
subparagraphs (ii) and (iii) of 01.10.2022
paragraph (ooo) of the
Third Schedule 20
paragraph (tt) and subparagraphs 01.04.2023
, (v) and (vi) of paragraph (w)
of the Third Schedule 20
paragraph (x) of the 27.05.2021
Third Schedule 21
01.10.2022
Column I
Column II
Column III
Section
Section of the principal enactment
Date of of this Act which is amended operation
s 2Amendment of section 10 of the principal enactment
Section 10 of the principal enactment is hereby amended by the insertion immediately after subsection (2)
of that section, of the following new subsection: -
“(2A) (a) Where a person pays to another person, on or after the date of commencement of this (Amendment)
Act, a sum of money amounting in the aggregate to
Rs. 500,000 or more, in a day, or in respect of a single transaction, or in respect of a series of single transactions relating to one event, otherwise than by way of an account payee cheque or account payee bank draft or by the use of a credit card, debit card or electronic payment system through a bank account-
any deduction shall not be allowed in respect of such payments in calculating the first mentioned person’s income; and
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the amounts paid shall not be considered as cost of an asset of the first mentioned person.
The provisions of paragraph (a) shall not apply to-
any payment by the Government of Sri
Lanka or any Government institution;
any payment by a bank or financial institution; and
such classes of persons or payments as may be prescribed by the Minister.
For the purpose of this subsection-
“bank account” means any account maintained in a bank or financial institution in Sri
Lanka;
“Government institution” means any
Department or undertaking of the
Government of Sri Lanka and includes any public corporation; and
“single transaction” means the purchase or procurement of any goods or services, on a single invoice, receipt or statement.”.
s 3Amendment of section 37 of the principal enactment
Section 37 of the principal enactment is hereby amended in paragraph (b) of subsection (1) of that section, by the substitution for the words “the asset;”, of the words and figures “the asset prior to April 1, 2021 and in improving the asset on or after April 1, 2021;”.
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s 4Amendment of section 73 of the principal enactment
Section 73 of the principal enactment is hereby amended in paragraph (a) of subsection (1) of that section as follows:–
in sub-paragraph (i) of that paragraph, by the substitution for the words “paid; or”, of the word
“paid;”;
in sub-paragraph (ii) of that paragraph, by the substitution for the words “employment is;”, of the words “employment is; or”; and
by the addition immediately after sub-paragraph (ii) of that paragraph, of the following new sub-paragraph:-
“(iii)
to the extent derived from a company resident and conducting the business in
Sri Lanka;”.
s 5Amendment of section 84A of the principal enactment
Section 84A of the principal enactment is hereby amended by the insertion immediately after subsection (1A)
of that section, of the following new subsection:-
“(1B) For the purpose of subsection (1A), “a person”
includes the Government of Sri Lanka, in the case of a payment made to a non-resident person other than a payment derived through a Sri Lankan permanent establishment.”.
s 6Amendment of section 85 of the principal enactment
Section 85 of the principal enactment is hereby amended by the addition immediately after subsection (3)
of that section, of the following new subsection: -
“(4) For the purpose of this section, “a person”
includes the Government of Sri Lanka, in the case of a payment made to a non-resident person other than a payment derived through a Sri Lankan permanent establishment.”.
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s 7Amendment of section 86 of the principal enactment
Section 86 of the principal enactment is hereby amended by the addition immediately after subsection (6)
of that section, of the following new subsections: -
“(7) The Commissioner-General may specify the procedure of withholding the tax from any payment made to a non-resident person under this Division.
Every withholding agent and financial institution shall comply with such procedure.
Every withholding agent who has deducted
Advance Income Tax under the provisions of section 84A shall file with the Commissioner-General a quarterly statement as specified by the Commissioner-General, within thirty days after the end of each quarter, ending on the thirtieth day of June, thirtieth day of
September and thirty first day of December.”.
s 8Amendment of section 100 of the principal enactment
Section 100 of the principal enactment is hereby amended in subsection (1) of that section, by the insertion immediately after paragraph (b) of that subsection, of the following new paragraph:-
“(bb) the Director-General of the Department of Fiscal
Policy, for the purpose of making decisions on the tax policy and Government revenue;”.
s 9Insertion of new section 111A in the principal enactment
The following new section is hereby inserted immediately after section 111 of the principal enactment, and shall have effect as section 111A of that enactment:-
111A. The Commissioner-General may obtain opinion or observation of the Secretary to the Treasury on the underlying tax policy relating to any provision of this Act, for the purpose of interpretation of such provisions under this Division or Division III of this
Chapter, or for any tax Act administered by the
Commissioner-General.”.
“Opinion of the Secretary to the
Treasury on underlying tax policy
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s 10Amendment of section 113 of the principal enactment
Section 113 of the principal enactment is hereby amended as follows:-
in subsection (1) of that section –
in paragraph (b) of that subsection, by the substitution for the words and figures
“Subject to subsection (1A),”, of the words and figures “Subject to subsection (1A), prior to April 1, 2023,”;
by the insertion immediately after paragraph (b) of that subsection, of the following new paragraph: -
“(bb)
the filing of any other document under this Act;”;
in subsection (1A) of that section, by the substitution for the words “A company”, of the words and figures “Prior to the year of assessment commencing from April 1, 2023, a company”; and
by the insertion immediately after subsection (1A)
of that section, of the following new subsections: -
“(1B) Subject to subsection (1C), with effect from the year of assessment commencing from
April 1, 2023, a person shall file such person’s tax returns electronically through the use of a computer system or mobile electronic device.
The Commissioner-General may authorise a person to file a tax return in writing, for a year of assessment, where the
Commissioner-General considers that such authorisation is just and equitable in the circumstances of the case.”.
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s 11Amendment of section 123 of the principal enactment
Section 123 of the principal enactment is hereby amended by the addition immediately after subsection (7)
of that section, of the following new subsection: -
“(8) Notwithstanding anything to the contrary in any other written law –
the Registrar-General of the Registrar
General’s Department;
the Registrar-General of Companies;
the Commissioner-General of Motor
Traffic;
an officer of any other Government institution in charge of granting contracts for the supply of goods, works, or consulting and non-consulting services;
a financial institution;
a stock exchange; or
any other person or a Government institution as may be prescribed by regulations, shall provide on a regular basis in electronic format, such information including information on financial transactions, or access to such records that are in any of such person’s or institution’s custody, as may be prescribed, to the Commissioner-General.”.
s 12Amendment of section 135 of the principal enactment
Section 135 of the principal enactment is hereby amended as follows: -
in subsection (3) of that section, by the substitution for the words “where the Assistant Commissioner”, of the words and figures “for any year of assessment commencing prior to April 1, 2023, where the
Assistant Commissioner”;
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by the insertion immediately after subsection (3) of that section, of the following new subsection: -
“(3A) Subject to subsection (4), where the
Assistant Commissioner has served a notice of an amended assessment on a tax payer under subsection (1), the Assistant Commissioner may further amend the original assessment to which the amended assessment relates, within-
the period specified in paragraph (b) of subsection (2); or
a period of one year after the Assistant
Commissioner served the notice of the amended assessment on the tax payer, whichever occurs later.”; and
in subsection (4) of that section, by the substitution for the word and figure “subsection (3)”, of the word and figures “subsection (3A)”.
s 13Amendment of section 139 of the principal enactment
Section 139 of the principal enactment is hereby amended in subsection (5) of that section as follows: -
in paragraph (a) of that subsection, by the substitution for the words “in writing”, of the words
“in writing or by electronics means”; and
by the addition immediately after paragraph (b) of that subsection, of the following new paragraph: -
“(c) The Commissioner-General shall, in the case of a request for review made on or after the date of commencement of this (Amendment)
Act, notify his decision and the reason for the decision under paragraph (a) within a period of two years from the date on which such request
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for review is received by the Commissioner-General. Where such decision is not notified within such period, the request for review shall be deemed to have been allowed, unless an appeal has been preferred to the Tax Appeals
Commission in accordance with paragraph (b)
of subsection (2) of section 140.”.
s 14Amendment of section 150 of the principal enactment
Section 150 of the principal enactment is hereby amended as follows: -
in subsection (1) of that section –
in paragraph (a) of that subsection, by the substitution for the words “assessed liability to pay tax,”, of the words
“assessed liability or payable amount of tax,”;
in paragraph (b) of that subsection, by the substitution for the words “six months.”, of the words “six months; or”;
by the addition immediately after paragraph (b) of that subsection, of the following new paragraph: -
“(c) at the request of the taxpayer, set off sixty percent of the refundable amount against the subsequent income tax payable by the taxpayer, prior to a tax audit on the refund claim.”; and
by the insertion immediately after subsection (2) of that section, of the following new subsection: -
“(2A) (a) If the taxpayer referred to in subsection (2) is a resident individual and the refund claim is not exceeding one hundred
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thousand rupees, the Commissioner-General shall pay the refund amount due, within three months of the date of the refund claim made by such resident individual, prior to a tax audit:
Provided that, if such resident individual is a senior citizen who is not an instalment payer and his refund claim is not exceeding twenty five thousand rupees for any quarter ending on the thirtieth day of June, thirtieth day of September, thirty first day of December and thirty first day of
March, such refund claim shall be paid within three months of the date of the refund claim made by such resident individual, prior to a tax audit.
The manner and the procedure relating to the payment of the refund amount due under paragraph (a), may be specified by the
Commissioner-General.”.
s 15Amendment of section 154 of the principal enactment
Section 154 of the principal enactment is hereby amended in paragraph (b) of subsection (2) of that section, by the substitution for the words “collected pursuant.”, of the words “collected pursuant to a levy of execution or by way of garnishment in accordance with the provisions of this Act.”.
s 16Amendment of section 182 of the principal enactment
Section 182 of the principal enactment is hereby amended by the addition immediately after subsection (4)
of that section, of the following new subsection: -
“(5) A financial institution that fails to comply with the procedure specified by the Commissioner-General in terms of subsection (7) of section 86, shall be liable for a penalty of an amount not exceeding fifty thousand rupees.”.
s 17Amendment of section 195 of the principal enactment
Section 195 of the principal enactment is hereby amended by the insertion immediately after the definition of the expression “tax” of that section, of the following new definition:–
“Tax Appeals Commission” means, the Tax
Appeals Commission established by the Tax
Appeals Commission Act, No. 23 of 2011;”.
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s 18Amendment of the First Schedule to the principal enactment
The First Schedule to the principal enactment is hereby amended as follows: -
in subparagraph (1) of paragraph 4 of that Schedule, by the substitution for the words and figures
“subparagraphs (2), (2A) and (3),”, of the words and figures “subparagraphs (2), (2A), (2B) and (3),”;
in item (d)(iii) of subparagraph (1) of paragraph 10
of that Schedule, by the substitution for the words
“exceeds or is equal to”, of the word “exceeds,”;
and
by the addition immediately after paragraph 12 of that Schedule, of the following new paragraph: -
“13. Tax rate for dividends
Notwithstanding the provisions in other paragraphs of this Schedule, where a person’s taxable income includes gains and profits from dividends for the second six months of the year of assessment commencing on April 1, 2022, such gains and profits shall be taxed at the rate of 15%.”.
s 19Amendment of the Second Schedule to the principal enactment
The Second Schedule to the principal enactment is hereby amended in paragraph 1 of that Schedule as follows:-
by the insertion immediately after subparagraph (1) of that paragraph, of the following new subparagraph:–
“(1A) A person who 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
and invests in Sri Lanka in the expansion of
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his existing undertaking, during any year of assessment shall be granted enhanced capital allowances computed in accordance with this paragraph, in addition to the capital allowances computed under the Fourth
Schedule.”;
in subparagraph (10) of that paragraph–
in the definition of the expresssion “Capital allowance expenditure” of that subparagraph, by the substitution for the words “Schedule;
and”, of the words “Schedule;”;
by the insertion immediately after the definition of the expression “Capital allowance expenditure” of that subparagraph, of the following new definitions:–
““existing undertaking” means any undertaking conducted by a person, prior to the first date of investment on depreciable assets;
“expansion” does not include–
the transfer, purchase or exchange of a depreciable asset of an existing undertaking of a person or an associate of a person;
or
the purchase of a depreciable asset to replace an existing depreciable asset of an undertaking of a person;
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“new undertaking” does not include–
the existing undertaking; or
an undertaking formed by splitting-up or re-construction of an existing undertaking of a person or an associate of a person;”.
s 20Amendment of the Third Schedule to the principal enactment
The Third Schedule to the principal enactment is hereby amended as follows:-
in paragraph (gg) of that Schedule, by the substitution for the words “an entity fully owned by”, of the words “an entity of which more than fifty percent of direct or indirect membership interest is owned by;”;
in paragraph (ooo) of that Schedule –
in subparagraph (ii) of that paragraph, by the substitution for the words and figures “another resident company which is subject to Advance
Income Tax under subsection (1A) of section 84A;”, of the words “another resident company;”;
by the addition immediately after subparagraph (ii) of that paragraph, of the following new subparagraph: -
“(iii) to a member who is a non-resident person where such dividend is paid prior to January 1, 2023;”;
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by the insertion immediately after paragraph (t) of that Schedule, of the following new paragraph: -
“(tt)
amounts derived by a non-resident person from engaging in a project of the
Government of Sri Lanka, if such project is approved by the Minister taking into consideration the economic benefits to the country, and is totally funded from foreign grants;”;
in paragraph (w) of that Schedule-
in subparagraph (ii) of that paragraph, by the substitution for the words and figures “on or after April 1, 2021”, of the words and figures
“on or after April 1, 2021, but prior to April 1,
2023,”;
in subparagraph (v) of that paragraph, by the substitution for the words and figures “on or after January 1, 2021”, of the words and figures
“on or after January 1, 2021, but prior to April 1, 2023,”;
in subparagraph (vi) of that paragraph, by the substitution for the words and figures “on or after April 1, 2021;”, of the words and figures
“on or after April 1, 2021, but prior to April 1,
2023, for a period of two years of assessment;”; and
by the addition immediately after paragraph (w) of that Schedule, of the following new paragraph: -
“(x) gains and profits received or derived by an authorised person carrying on a Business of
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Strategic Importance as approved under the provisions of the Colombo Port City
Economic Commission Act, No. 11 of 2021
and the employment income of an employee employed in terms of section 35 of that Act, up to the extent provided for in that Act for each year of assessment.”.
s 21Relief from penalty or interest
Where a company has not paid the tax in accordance with the provisions of item (a) of subparagraph (4) of paragraph 4 of the First Schedule to the principal enactment as amended by the Inland Revenue (Amendment) Act, No. 45
of 2022, for the period commencing on October 1, 2022 and ending on the date of the commencement of the said Inland
Revenue (Amendment) Act, No. 45 of 2022, but pays the amount of tax payable by such company, on or before the thirtieth day of the succeeding month of the date of commencement of this Act, such company shall not be liable to any penalty or interest in terms of the provisions of the principal enactment.
an enterprise 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 on or after
April 1, 2018 but prior to October 1, 2022;
and
such agreement provides for the profits and income of that enterprise or any dividend paid by that enterprise to be fully or partly exempt from income tax or to be taxed at a reduced rate of income tax,
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such profits and income of such enterprise or such dividend paid by such enterprise shall continue to be exempt from income tax payable, or shall be liable for income tax at the rate provided for in such agreement, as the case may be.
s 23Replacement of Table ‘A’, Table ‘B’ and Table ‘C’ of the Inland Revenue (Amendment) Act, No. 45 of 2022
Table ‘A’, Table ‘B’ and Table ‘C’ of the Inland
Revenue (Amendment) Act, No. 45 of 2022 are hereby repealed and the following tables are substituted therefor and shall be deemed to have come into operation in accordance with subsections (2), (3), (4) and (5) of section 1
of the Inland Revenue (Amendment) Act, No. 45 of 2022: -
Act, No. 4 of 2023
(section 1)
“Table ‘A’
Column I
Column II
2 5 4 12 5 14 6 16 11 66 18 87 21 94 22 120 24 133 25 134 26 135 27 136 32(1) and (3)
195 33(1), (2), (3), subparagraphs (1A) and (1B) of paragraph 1, (4) and (5)
paragraphs 3, 4, 5 and 7 of the First Schedule 34
subparagraph (6A) of paragraph 1 of the Second
Schedule 35(1)
paragraph (gg) of the Third Schedule 37(1)
item (b) of subparagraph (4) of paragraph 1
of the Sixth Schedule 38
new section
Section of the principal enactment which is amended
Section of this Act
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Column I
Column II
Section of this Act
Section of the principal enactment which is amended 8(1)
subsection (3) of section 19 33(1)
subparagraph (5) of paragraph 1 of the First Schedule 35 (2), (3), (4) and (5)
paragraphs (hh), (oo), (ooo) and (rr)
of the Third Schedule 36(2)
paragraph 2 of the Fifth Schedule 37(3) and (4)
paragraphs 8 and 10 of the
Sixth Schedule
Table ‘B’
(section 1)
Column I
Column II
Column III
Section
Section of the principal enactment
Date of of this Act which is amended operation 3 10 01.04.2021 7 18 01.04.2021 8 19(4) 01.04.2018 9 46 01.04.2021 10 54 01.04.2018 12 69 01.04.2018
Table ‘C’
(section 1)
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Column I
Column II
Column III
Section
Section of the principal enactment
Date of of this Act which is amended operation 13 72 01.04.2018 14 73 01.04.2018 15 83A 01.01.2023 16 84A 01.01.2023 17 85 01.01.2023 19 88 01.01.2023 20 90 01.04.2021 32(2)
195 01.04.2020 33(1) and (7)
subparagraph (1C) of paragraph 1 01.04.2023
and paragraph 11 of the
First Schedule 35(6) and (7)
paragraphs (u) and (w) of the 31.03.2023
Third Schedule 36(1)
subparagraph (e) of paragraph 1 01.04.2021
of the Fifth Schedule
Table ‘C’
(section 1)
s 24
In the event of any inconsistency between the Sinhala and Tamil texts of this Act, the Sinhala text shall prevail.
Sinhala text to prevail in case of inconsistency
”.
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