Act of Parliament · As enacted
Inland Revenue (Amendment) Act 2008
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s 1Short title
This Act may be cited as the Inland Revenue
(Amendment) Act, No. 9 of 2008.
s 2Amendment of section 7 of Act, No. 10 of 2006
Section 7 of the Inland Revenue Act, No.10 of 2006,
(hereinafter referred to as the “principal enactment”) is hereby amended as follows:—
in sub-paragraph (xvii) of paragraph (b) of that section, by the substitution for the words “being profits and income of that society”, of the words and figures “being profits and income of that society for any year of assessment ending on or before
March 31, 2008 or for any year of assessment commencing on or after April 1, 2013,”;
in sub-paragraph (iii) of paragraph (g) of that section, by the substitution for the words and figures
“Presidents Fund Act, No. 7 of 1978.”, of the words and figures “Presidents Fund Act, No. 7 of 1978;”;
by the addition immediately after paragraph (g) of that section, of the following new paragraphs:—
“(h)
the profits and income for every year of assessment within a period of five years, commencing on April 1, 2008, of any registered society within the meaning of the
Co-operative Societies Law, No. 5 of 1972;
the profits and income of the Api Wenuwen
Api Fund established by the Api Wenuwen
Api Fund Act, No.6 of 2008.”.
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s 3Amendment of section 8 of the principal enactment
Section 8 of the principal enactment as amended by
Act, No. 10 of 2007, is hereby further amended as follows:—
in subsection (1) of that section :–
by the substitution in paragraph (b) of that subsection, for the words “one half of the official emoluments paid to-”, of the words and figures“one half of the official emoluments for any year of assessment ending on or before March 31, 2008, paid to-”;
by the substitution in paragraph (d) of that subsection, for the words “the emoluments arising in Sri Lanka and any income”, of the words and figures“the emoluments arising in
Sri Lanka prior to April 1, 2008, and any income”;
by the insertion immediately after paragraph (d) of that subsection, of the following new paragraph :–
“(dd)
the emoluments arising in Sri Lanka and any income not arising in Sri Lanka of any individual who is an expert and who is not a citizen of Sri Lanka and is employed in Sri Lanka by any undertaking which has entered into an agreement with the Government of Sri
Lanka, being an agreement which provides for the exemption from income tax of such emoluments or by any
Strategic
Development
Project
Gazetted by the Board of Investment of
Sri Lanka under subsection (4) of section 3 of the Strategic Development
Projects Act, No. 14 of 2008;
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For the purpose of this paragraph,
“expert” means an individual who has expertise in such field as may be determined by the
Commissioner-General, as being a field in which sufficient expertise is not available among the citizens of
Sri Lanka;”;
in paragraph (h) of that subsection, by the substitution for the words “granted to the wife”, of the words“granted to the spouse”;
and
in paragraph (p) of that subsection, by the substitution for the words from “which in the opinion of the Commissioner-General” to the words “allotment of grant, as the case may be; and”, of the words “which in the opinion of the
Commissioner-General is reasonable”;and
in subsection (3) of that section, by the substitution for the words “whichever is earlier.”, of the words
“whichever is earlier, but not later than April 1,
2008.”. be exempt from income tax”.
s 4Amendment of section 9 of the principal enactment
Section 9 of the principal enactment as amended by
Act, No. 10 of 2007, is hereby further amended as follows:—
by the substitution in paragraph (h) of that section, for the words and figures “or any bank established under the Regional Development Banks
Act, No. 6 of 1997”, of the words and figures “or any bank established under the Regional Development
Banks Act, No. 6 of 1997 or any registered society within the meaning of the Co-operative Societies
Law, No. 5 of 1972;”;
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in paragraph (k) of that section, by the substitution for the words “External Rupee Account.”, of the words “External Rupee Account;”; and
by the addition immediately after paragraph (k) of that section, of the following new paragraphs:—
“(l)
the interest or discount arising or accruing to any non-resident citizen of Sri Lanka, from the purchase of any Motherland Development
Bond denominated in foreing currency and issued by or on behalf of the Government of
Sri Lanka;
the interest accruing or arising on or after
April 1, 2008, from any investment made outside Sri Lanka to any person resident in
Sri Lanka, where such interest is remitted to
Sri Lanka through a bank.”.
s 5Amendment of section 10 of the principal enactment
Section 10 of the principal enactment as amended by
Act, No. 10 of 2007, is hereby further amended in subsection (1) of that section, by the addition immediately after paragraph (i) of that subsection of the following new paragraph:—
“(j)
any dividend paid on or after April 1, 2008, by a company not resident in Sri Lanka to any shareholder resident in Sri Lanka, where the amount of such dividend is remitted to Sri Lanka through a bank.”.
s 6Amendment of section 11 of the principal enactment
Section 11 of the principal to enactment is hereby amended by the repeal of subsection (2) of that section, and the substitution therefor of the following subsection:—
“(2) There shall be exempt from income tax—
income accruing to the owner of any house from such house, the construction of which is completed prior to April 1, 2008, being
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income for that year of assessment in which such construction was completed and for the four years of assessment immediately succeeding that year of assessment, if such house is used solely for residential purposes:
Provided that where the floor area of the house is one thousand and five hundred square feet or less, the income accruing to the owner shall be exempt from income tax for the year of assessment in which the construction of that house is completed and for the six years of assessment immediately succeeding that year of assessment; and
income accruing to the owner of any house from such house, the floor area of which is five hundred square feet or less and the construction of which is completed on or after
April 1, 2008, being income for that year of assessment in which the construction was completed and for the four years of assessment immediately succeeding that year of assessment, if such house is used solely for residential purposes.”.
s 7Amendment of section 13 of the principal enactment
Section 13 of the principal enactment as amended by
Act, No. 10 of 2007, is hereby further amended as follows:—
by the substitution in paragraph (a) of that section, for the words “earned in any year of assessment in foreign currency”, of the words and figures“earned in any year of assessment prior to April 1, 2008, in foreign currency”;
by the substitution in paragraph (c) of that section, for the words “the profits and income earned in foreign currency”, of the words and figures,“the profits and income earned in foreign currency in any year of assessment ending on or before March 31, 2008,”;
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by the substitution in paragraph (d) of that section, for the words “the profits and income earned in foreign currency”, of the words and figures“the profits and income earned in foreign currency in any year of assessment ending on or before March 31, 2008,”;
by the insertion immediately after paragraph (dd) of that section, of the following new paragraph:—
“(ddd)
the profits and income earned in foreign currency by any resident company, any resident individual or any partnership in
Sri Lanka, from services rendered in or outside
Sri Lanka to any person or partnership outside
Sri Lanka, being services rendered in the course of carrying on of any profession or vocation as is specified by the
Commissioner-General by Notice published in the Gazette, as being in the interest of the national economy 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 (i) of that section, of the following new paragraph:—
“(ii)
the profits and income within the meaning of paragraph (a) of section 3, arising from the cutting and polishing of gems which are brought to Sri Lanka and exported after such cutting and polishing;”;
by the insertion immediately after paragraph (x) of that section, of the following new paragraph:—
“(xx)
an amount equal to the interest payable to any bank in Sri Lanka in respect of any loan granted, where the full amount of such loan is invested in any new undertaking referred to in section 24C;”;
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by the insertion immediately after paragraph (y) of that section, of the following new paragraph:—
“(yy).
any profits and income arising or accruing to any company, partnership or body of persons outside Sri Lanka, from any payment made in respect of the use on or after April 1, 2008, of any plant, machinery or equipment supplied by such company, partnership or body of persons to the Government of Sri Lanka, any public corporation, any Government
Institution or to any other undertaking, for the use in any project approved by the
Minister as being essential for the economic development of Sri Lanka;”; and
by the addition immediately after paragraph (z) of that section, of the following new paragraphs:—
“(zz)
the profits and income of any individual who is not a citizen of Sri Lanka and who is employed in Sri Lanka in any undertaking, being profits and income arising or derived from outside Sri Lanka during the period commencing from April 1, 2008, and ending on the date of cessation of such employment;
(zzz)
the profits and income within the meaning of paragraph (a) of section 3, of any undertaking for the construction and sale of houses for low income families under a scheme approved by the Urban Development Authority or the
National Housing Authority, being houses the floor area of which does not exceed five hundred square feet, if the sale of any such house takes place before April 1, 2013.”.
s 8Amendment of section 17 of the principal enactment
Section 17 of the principal enactment as amended by
Act, No. 10 of 2007, is hereby further amended in subsection (1) of that section, by the substitution for the words from “in
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which the undertaking commences to made profits” to the end of that subsection, of the following words and figures:—
“in which the undertaking commences to make profits 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:
Provided that where the period for which the profits and income are exempt from income tax commences after March 31, 2008, the period for which such profits and income are exempt, shall be three years.”.
s 9Amendment of section 18 of the principal enactment
Section 18 of the principal enactment is hereby amended in subsection (1) of that section, by the substitution for the words “not more than twelve years as may be determined”, of the words “not more than twelve years commencing from not later than March 31, 2009, as may be determined”.
s 10Amendment of section 19 of the principal enactment
Section 19 of the principal enactment is hereby amended in subsection (1) of that section,by the substitution for the words from “in which the undertaking commences to make profits” to the end of that subsection, of the following words and figures:—
“in which the undertaking commences to make profits from transactions entered into in that year of assessment or from the commencement of the year of accessment 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:
Provided that where the period for which the profits and income are exempt from income tax commences after April 1, 2008, the period for which such profits and income are exempt, shall be three years.”.
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s 11Amendment of section 20 of the principal enactment
Section 20 of the principal enactment is hereby amended in subsection (2) of that section as follows :—
by the substitution in paragraph (c) of that subsecton, for the words and figures “April 1,
2008-”, of the words and figures “April 1,
2009-”; and
by the substitution in paragraph (e) of that subsection, for the words and figures “prior to April 1, 2008”, of the words and figures “prior to April 1,
2009”.
s 12Amendment of section 21 of the principal enactment
Section 21 of the principal enactment is hereby amended in paragraph (b) of subsection (2) of that section, by the substitution for the words and figures “not later than
March 31, 2008”, of the words and figures “not later than
March 31, 2009.”.
s 13Insertion of new section 21A in the principal enactment
The following new section is hereby inserted immediately after section 21 of the principal enactment and shall have effect as section 21A of that enactment :—
21A. (1) 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, from any relocated undertaking referred to in subsection (2), shall be exempt from income tax for each year of assessment within a period of five years, commencing on April 1, 2009.
For the purpose of subsection (1), a
“relocated undertaking” in relation to any company and to any year of assessment referred to in subsection (1), means an undertaking—
which prior to November 1, 2007, was being carried on by that company in any location within the
“Exemption of profits and income of undertakings relocated from certain districts.
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administrative district of Colombo or
Gampaha, with not less than one hundred individuals employed therein ;
which is relocated in any location outside the administrative district of Colombo and Gampaha and commencing from a date not later than March 31, 2009, continues to—
carry on commercial operations;
and
employ such number of individuals as is not less than the number employed as at
November 1, 2007, throughout that year of assessment ;
in respect of which the expenditure incurred in the relocation is not less than one hundred million rupees ;
and
of which 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) are exempt from income tax under any other provision of this Act or under any agreement entered into 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 a period extending beyond April 1, 2009.”.
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s 14Amendment of section 22 of the principal enactment
Section 22 of the principal enactment is hereby amended in subsection (1) of that section, by the substitution for the words from “in which the undertaking commences to make profits”, to the end of that subsection, of the following words and figures :—
“in which the undertaking commences to make profits 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:
Provided that where the period for which the profits and income are exempt from income tax commences after
April 1, 2008, the period for which such profits and income are exempt, shall be three years.”.
s 15Amendment of section 23 of the principal enactment
Section 23 of the principal enactment is hereby amended as follows :—
in subsection (1) of that section:—
by the substitution for the words “of any venture capital company shall be exempt”, of the words “of any venture capital company, derived from any specified investment in any project referred to in paragraph (a), (b) or (c) hereafter, shall be exempt” ; and
by the addition immediately after the proviso to that subsection, of the following further proviso :—
“Provided further that, where the venture capital company commences commercial
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operations on or after April 1, 2008, the period for which the profits and income are exempt from income tax, be three years.”; and
in subsection (6) of that section, by the repeal of the definitions of the expressions “non-performing” and “under performing”.
s 16Amendment of section 24 of the principal enactment
Section 24 of the principal enactment is hereby as follows :—
in subsection (1) of that section, by the substitution for the words from “shall be exempt from income tax” to the end of that subsection, of the words “shall be exempt from income tax for a period of three years commencing from the year of assessment in which such business commences to make profits 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 such business completes a period of two years reckoned from the date on which the business commences to carry on commercial operations, whichever earlier.”; and
by the repeal of subsection (2) of that section and the substitution therefor of the following subsection:—
“(2)
The provisions of subsection (1)
shall apply in respect of any business of providing accommodation to tourists in
Manor Houses or Thematic Bungalows, carried on by a person registered on or after
April 1, 2003 with the Ceylon Tourist Board and for a period of ten years from the date of such registration.”.
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s 17Insertion of new sections 24C and 24D in the principal enactment
The following new sections are hereby inserted immediately after section 24B of the principal enactment and shall have effect as section 24C and section 24D of that enactment :—
24c. (1) 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) from the operation of any new undertaking referred to in subsection (2), shall be exempt from income tax for a period of five years commencing from the year of assessment in which such undertaking commences to make profits 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 such undertaking complets two years reckoned from the date on which the undertaking commences to carry on commercial operations, whichever occurs earlier.
For the purpose of subsection (1),
“new undertaking” means an undertaking which—
is not formed by the splitting up, reconstruction or the acquisition of an undertaking which was in existence before November 7, 2007 ;
commences commercial operations on or after November 7, 2007 ; and
is located within the Eastern Province, and the sum invested in the undertaking before
April 1, 2010 (other than in land), is not less than thirty million rupees.
“Exemption from income tax of the profits and income of any new undertakings located within the
Eastern
Province.
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24D.
Exemption of the profits and income of any new undertaking located in any lagging region
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 new undertaking
(other than any specified undertaking) located in any lagging region and referred to in subsection (2), shall be exempt from income tax for a period of five years commencing from the year of assessment in which such undertaking commences to make profits 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 two years reckoned from the date on which the undertaking commences to carry on commercial operations, whichever occurs earlier.
For the purpose of subsection (1) :—
“lagging region” in relation to any year of assessment means any Divisional
Secretary’s Division determined by the
Minister in consultation with any appropriate authority and specified by
Order published in the Gazette as being in a state of economic backwardness in the year of assessment immediately preceding that year of assessment ;
“new undertaking” means an undertaking—
which commences commercial operations on or after April 1,
2008 ; and
in which the sum invested in the acquisition of capital assets (other than land), after
November 7, 2007 but before
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March 31, 2010, is not less than thirty million rupees ; and
“specified undertaking” means an undertaking engaged in the sale of any article not produced or manufactured by such undertaking.”.
s 18Amendment of section 25 of the principal enactment
Section 25 of the principal enactment as amended by Act, No. 10 of 2007, is hereby farther amended as follows :—
in subsection (1) of that section:—
by the substitution in sub-paragraph (ii) of paragraph (b) of the proviso to paragraph (a)
of that subsection, for the words “being a ship which is owned or chartered by a company”, of the words “being a ship which is owned by a company” ; and
by the substitution in paragraph (v) of the proviso to paragraph (k) of that subsection, for all the words from “his place of employment or vice versa.”, to the end of that proviso, of the words “his place of employment or vice versa.” ;
in subsecton (2) of that section, by the substitution for the words and figure “of subsection (1)”, of the words and figure “of subsection (1)” ;
in subsection (3) of that section, by the substitution in paragraph (ii) of the further proviso to paragraph (b) of that subsection, for the words “for the replacement of such capital asset”, of the words “for the replacement of such capital asset” ; and
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in subsection (7) of that section, by the substitution in sub-paragraph (vi) of paragraph (f) of that subsection, for the words
“the proceeds of disposal of such asset, less any cost of acquisition other than lease rental paid on such assets by such person acquiring it”, of the words “the proceeds of disposal of such assets, less any cost of acquisition other than lease rental paid on such assets by such person acquiring it”.
s 19Amendment of section 26 of the principal enactment
Section 26 of the principal enactment as amended by Act, No. 10 of 2007 is hereby further amended as follows :—
in subsection (1) of that section, by the addition immediately after paragraph (u) of that subsection, of the following paragraph :—
“For the purposes of paragraphs (s), (t) and (u), of this subsection, the term “employee” shall have the same meaning as given to such term in section 131 of this Act; and
in subsection (2) of that section, by the substitution for the words and figures “under paragraph (a) or paragraph (d) of subsection (1) of section 25 :-”, of the words and figures “under paragraph (a) or paragraph (c) of subsection (1) of section 25 :—”.
s 20Amendment of section 32 of the principal enactment
Section 32 of the principal enactment as amended by Act, No. 10 of 2007 is hereby further amended as follows :—
in subsection (1) of that section—
by the substitution for the words “for any year of assessment shall be his total statutory income for the year, other than the-”, of the words “for any year of assessment shall be his total statutory income for the year other than the-”; and
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in paragraph (c) of that subsection, by the substitution for the words and figures
“deducted under section 134 or section 135, as the case may be;”, of the words and figure
“deducted under section 134;”;
in subsection (2) of that section, by the substitution in the definition of the expression “interest income”, for the words and figure “sub-paragraph (b) of subsection (3) of this section,”, of the words and figure “sub-paragraph (b) of this subsection,”;
in subsection (3) of that section, by the addition immediately after paragraph (d) of that subsection of the following new paragraphs :—
“(e)
the profits and income of such person from the sale of any Rupee Denominated Treasury
Bond, purchased out of funds drawn from any Treasury Bond Investment External
Rupee Account ;
where such person is the Credit Guarantee
Fund of the Central Bank of Sri Lanka, the interest accruing to such Fund from any Treasury Bond issued under the
Registered Stocks and Securities Ordinance
(Chapter 420) or from any Treasury Bill issued under the Local Treasury Bills
Ordinance (Chapter 417) ;
interest on which income tax has been deducted under section 95 and accruing to any person or partnership out side Sri Lanka, on any corporate debt security within the meaning of section 135, issued by or on behalf of any company in Sri Lanka and purchased by such person or partnership out of foreign currency brought into Sri Lanka and converted into Sri Lanka currency for such purchase ; and
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the profits and income from the sale of any gem on which tax has been deducted by the
National Gem and Jewellery Authority established by the National Gem and
Jewellery Authority Act, No. 50 of 1993, under subsection (1) of section 161A of this
Act.”;
in subsection (5) of that section—
in paragraph (a) of that subsection, by the substitution for the words “such person for any year of assessment by way of ”, of the words “such person for any year of assessment by way of ”;
in paragraph (b) of that subsection, by the substitution for the words “referred to in paragraph (c),”, of the words “referred to in paragraph (c) or paragraph (d),”;
by the insertion immediately after paragraph (c) of that subsection, of the following new paragraph :—
“(d)
any loss incurred on or after April 1,
2008, in any business of finance leasing to the extent of any profits from such business included in such total statutory income and the balance, if any, of such loss after such deduction, shall be deemed to be a loss for the year of assessment immediately succeeding that year of assessment.”;
in paragraph (a) of subsection (6) of that section, by the substitution for the words and figures
“section 23 or section 24 of this Act,”, of the words and figures “section 23, section 24, section 24A, section 24B, section 24C or section 24D of this
Act,”; and
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in subsection (7) of that section, by the substitution for the words “shall be ascertained in the manner provided in this Act”, of the words “shall be ascertained in the manner provided for in this
Act”.