Act of Parliament · As enacted
Inland Revenue (Amendment) Act 2015
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
s 1Short title and the date of operation
This Act may be cited as the Inland Revenue
(Amendment) Act, No. 9 of 2015, and shall be deemed for all purposes to have come into operation on April 1, 2015 unless stated otherwise.
s 2Amendment of section 7 of the Inland Revenue Act, No. 10 of 2006
Section 7 of the Inland Revenue Act, No. 10 of 2006
(hereinafter referred to as the “principal enactment”) as last amended by Act, No.8 of 2014 is hereby further amended in paragraph (b) of that section as follows:-
by the substitution in sub-paragraph (xvii) of that paragraph for the words and figures “on or before
March 31, 2008 or for any year of assessment commencing on or after April 1, 2013, arising out of business”, of the words and figures “on or before
March 31, 2008, arising out of business”;
by the substitution in sub-paragraph (lxxii) of that paragraph for the words and figures “Act, No. 12 of 1986; and”, of the words and figures “Act, No. 12 of 1986;”;
by the substitution in sub-paragraph (lxxiii) of that paragraph for the words and figures “Trust
Ordinance (Chapter 87).”, of the words and figures
“Trust Ordinance (Chapter 87); and” ; and
by the addition immediately after sub-paragraph (lxxiii) of that paragraph, of the following new sub-paragraph:-
“(Ixxiv) the Diabetes Association of Sri Lanka incorporated by the Diabetes Association of
Sri Lanka (Incorporation) Act, No. 1 of 1992.” .
s 3Amendment of section 8 of the principal enactment
Section 8 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended in subsection (1) of that section as follows:-
by the substitution in paragraph (x) of that subsection for the words “for that year of assessment.”, of the words “for that year of assessment; and”; and
by the addition immediately after paragraph (x) of that subsection, of the following new paragraph:-
“(y) benefit from provision of any loan by the employer free of interest or at a subsidised rate of interest, if such loan is provided not out of funds borrowed for that purpose. ” .
s 4Amendment of section 9 of the principal enactment
Section 9 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended as follows:–
by the substitution in sub-paragraph (ii) of paragraph (h) of that section, for the words and figures
“commencing on or after April 1, 2011, to any individual”, of the words and figures “ commencing on or after April 1, 2011, but prior to January 1, 2015, to any individual”;
by the addition immediately after paragraph (h) of that section, of the following new paragraphs:-
“(hh)
such part of any interest accruing for, or arising in, for the period commencing on
January 1, 2015 and ending on March 31,
2015, or for any year of assessment commencing on or after April 1, 2015 to any individual who is a citizen of Sri Lanka and resident in Sri Lanka and who is sixty years or more or reaching sixty years during the period commencing from January 1, 2015
and ending on March 31, 2015 or who is more than fifty nine years old on the first day of the year of assessment commencing on or after April 1, 2015, from any deposit maintained in any bank or financial institution authorized by the Central Bank of Sri Lanka to accept deposits from the general public or any registered society within the meaning of the Co-operative
Societies Law, No. 5 of 1972;
(hhh)
such part of any interest accruing for, or arising in, any year of assessment commencing on or after April 1, 2015, to any individual or charitable institution where such individual or charitable institution maintains one savings account or more than one savings account, where the interest paid for a month is less than five thousand rupees.
For the purpose of this paragraph,
“savings account” means an account, whether or not subject to any condition affecting the right to withdraw money therefrom and which bears interest at a rate not dependent on the period for which the deposit is maintained;”; and
by the addition immediately after paragraph (o) of that section , of the following new paragraphs:-
“(p)
the interest or discount accruing or arising to any person from any investment made on or after January 1, 2015 in any
Corporate Debt Security, issued by the
Urban
Development
Authority established by the Urban Development
Authority Law, No. 41 of 1978; and
the interest accruing or arising to any individual who is Sri Lankan, living or employed abroad from any investment made on or after January 1, 2015 in Nation
Development Bonds issued by the Central
Bank of Sri Lanka on behalf of the
Government.”.
s 5Amendment of section 10 of the principal enactment
Section 10 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended in subsection (1) of that section as follows:-
by the substitution in paragraph (l) of that subsection for the words “the second mentioned dividend by that company.”, of the words “the second mentioned dividend by that company;” and
by the addition immediately after paragraph (l) of that subsection, of the following new paragraph:-
“(m)
any dividend paid to a shareholder of any new undertaking commenced on or after
April 1, 2015 for manufacture of products for export, and which is not formed by splitting-up or re-construction of an existing undertaking with an investment of not less than two million US Dollars
(or equivalent in any other currency) and for which depreciation allowances are entitled to under paragraph (h) of the first proviso to paragraph (a) of subsection (1) of section 25, where such dividends are paid out of such profits and income of such new undertaking during the period reckoned from the year of assessment in which such new undertaking commences to carry on commercial operations and another four years of assessment immediately succeeding that year of assessment.”.
s 6Amendment of section 13 of the principal enactment
Section 13 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended as follows:-
by the insertion immediately after paragraph ( qqqq)
of that section, of the following new paragraph:–
“(qqqqq)
one half of the profits and income for any period on or after April 1, 2015
from the production of films or dramas of any individual who produces an award winning cinema or a drama at an international film or drama festival, for a period of five years of assessment commencing from the year in which such award is received;” ;
by the insertion immediately after paragraph ( tt) of that section, of the following new paragraph:–
“ (ttt)
the profits and income arising or accruing to any Unit Trust from investments made on or after January 1, 2015 in US Dollar deposits or US
Dollar denominated securities listed in any foreign stock exchange;”; and
by the insertion immediately after paragraph
(yyyyyyyy) of that section, of the following new paragraph:-
“(yyyyyyyyy)
the profits and income arising or accruing to any company, partnership or body of persons outside Sri Lanka for any year of assessment commencing on or after April 1, 2015, from any payment made by way of royalty as a specific requirement of any information technology or business process outsourcing company in Sri Lanka, for the year of assessment in which such company in Sri Lanka commences such operations and for another year of assessment immediately succeeding that year of assessment;”.
s 7Amendment of section 25 of the principal enactment
Section 25 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended as follows:–
in subsection (1) of that section-
by the repeal of sub-paragraph (v) and sub-paragraph (vi) of paragraph (a) of that subsection, and the substitution therefor, of the following sub-paragraph:–
“(v)
any qualified building constructed or any unit of a condominium property acquired and which is approved by the
Urban
Development
Authority established by the
Urban
Development Authority Law,
No. 41 of 1978 and constructed to be used as a commercial unit or any hotel building (including a hotel building complex) or any industrial building (including any industrial building complex) acquired from a person who had used such building in any trade or business-
(A)
prior to April 1, 2015 at the rate of six and two third per centum per annum, on the cost of construction or cost of acquisition of such building or unit; or
(B)
on or after April 1, 2015 at the rate of ten per centum per annum on the cost of construction or the cost of acquisition of such building or unit;”;
by the addition immediately after paragraph (g) of the proviso to paragraph (a) of that subsection, of the following new paragraph:–
“(h)
where any plant, machinery or equipment acquired and used on or after April 1, 2015, in any new undertaking commenced on or after April 1, 2015 for the manufacture of products for exports with an investment of not less than two million US Dollars or its equivalent in other currency and which is not formed by splitting up or re-construction of an existing undertaking, the rate of depreciation shall be hundred per centum of the cost of acquisition;”;
in the second proviso to paragraph (a) of that subsection, by the substitution for the words and figures “referred to in sub-paragraphs (i), (ii), (iii), or (iv)”, of the words and figures “referred to in sub-paragraph (i), (ii), (iii), (iv) or (v)”;
in the proviso to paragraph (i) of that subsection, by the insertion immediately after paragraph (B) of that proviso, of the following new paragraph:–
“(C)
where such expenditure on research is incurred on or after
April 1, 2015 , for any innovation or research relating to high value agricultural products and such research is carried out by such person himself or through any research institution, in Sri Lanka”;
by the insertion immediately after paragraph (i) of that subsection, of the following paragraph:–
“For the purpose of this paragraph the
Commissioner-General shall issue guidelines in order to ensure the uniform application of deduction;”;
by the substitution in sub-paragraph (iv)
to the proviso to paragraph (k) of that subsection for the words and figures
“under Chapter XIV or in the opinion”, of the words and figures “under Chapter XIV of this Act where such benefit is not exempt under paragraph (s) of subsection (1) of section 8 of this Act, or in the opinion”;
by the repeal of paragraph (w) of that subsection and the substitution therefor, of the following new paragraphs:-
“(w)
for any year of assessment commencing on or after April 1, 2014
any royalty or ground rent payable for the relevant year of assessment and paid by such person if such amount was not allowed to be deducted prior to April 1, 2014, under paragraph (a) of subsection (5) of section 32;
for any year of assessment commencing on or after April 1,
2015, an amount equal to three hundred per centum of the expenditure incurred by any person registered with the Tertiary and
Vocational Education Commission established under the Tertiary and
Vocational Educational Act, No. 20
of 1990 on standard skill development training by any institution recommended by such
Commission to be provided to trainees;
for any year of assessment commencing on or after April 1,
2015, an amount equal to three hundred per centum of the expenditure incurred by any person for brand promotion for the export of products manufactured by such persons.
For the purpose of this paragraph
“brand promotion” means, creating an internationally recognized brand name for a local value added product or produce.”;
in subsection (5) of that section, by the insertion at the end of the proviso to that subsection, of the following new paragraph :-
“For the purpose of this subsection “person”
includes a partnership.”;
in subsection (7) of that section-
by the substitution for the words in the definition of “capital assets” in paragraph (b) of that subsection for the words “
means any plant, machinery, fixture, fitting, utensils, articles or equipment”, of the words “means any plant, machinery, fixture, fitting, utensils, articles or equipment, including computer software or intangible assets other than goodwill,”;
by the repeal of sub-paragraph (iii) of paragraph (f) of that subsection, and the substitution therefor, of the following new sub-paragraph:-
“(iii)
where a company is incorporated
(hereinafter referred to as the “first mentioned company”) to -
take over the business
(including the capital assets) carried on by an individual either solely or in partnership with others, and acquires the capital assets of such business being carried on by such individual or partnership;
or
segregate the business of long term insurance and general insurance as separate businesses as required in terms of
Regulation of Insurance
Industry (Amendment)
Act, No. 3 of 2011 or to consolidate, acquire or merge of any bank, financial institution or leasing company under the guidance of the
Central Bank of Sri Lanka subject to conditions specified in the Guidelines issued by the
Commissioner General where such businesses are carried out separately prior to such segregation, consolidation, acquisition or merger, by each such company (hereinafter referred to as the “second mentioned company”), the cost of acquisition of each capital asset by the first mentioned company shall be deemed to be the cost of acquisition of such capital asset by such individual or partnership or the second mentioned company, reduced by the amount of any allowance for depreciation granted in respect of such asset to such individual or partnership or second mentioned company, and the date of acquisition of such capital assets by the first mentioned company, shall be deemed to be the date of acquisition of such capital asset by such individual, partnership or second mentioned company;”.
s 8Amendment of section 26 of the principal enactment
Section 26 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended in subsection (1) of that section as follows:-
in paragraph (l) of that subsection:-
by the substitution for the words and figures in sub-paragraph (v) of that paragraph “the Value Added Tax Act,
No. 14 of 2002; or” of the words and figures
“the Value Added Tax Act, No. 14 of 2002
and any Nation Building Tax on Financial
Services within the provisions of the Nation
Building Tax Act, No. 9 of 2009; or”;
by the substitution in sub-paragraph (vii)
of that paragraph for the words and figures
“Act, No. 12 of 2013;”, of the words and figures “ Act, No. 12 of 2013; or”; and
by the insertion immediately after sub-paragraph (vii) of that paragraph, of the following new sub-paragraph:-
“(viii)
Super Gain Tax, Bars and Taverns
Levy, Casino Industry Levy, Mobile
Telephone Operator Levy, Satellite
Location Levy, Dedicated Sports
Channel Levy and Mansion Tax imposed and levied under the provisions of the Finance Act,
No. 10 of 2015,”; and
by the repeal of paragraph (m) of that subsection and substitution therefor, of the following new paragraph:-
“(m)
any ground rent or royalty payable for any period prior to April 1, 2014 and paid after
April 1, 2014 which is deductible under paragraph (a) of subsection (5) of section 32 or annuity paid by such person;”.
s 9Amendment of section 32 of the principal enactment
Section 32 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended in subsection (5) of that section as follows:-
in paragraph (a) of that subsection, by the substitution for all the words and figures from “sums paid by such person” to the words and figures
“subsection (1) of section 26:”, of the following words and figures:-
“sums paid by such person for any year of assessment by way of:
any ground rent or royalty payable for any period prior to April 1, 2014 and which is paid after April 1, 2014; or
annuity or interest, which he is not entitled to deduct under section 25.
For the purpose of this paragraph interest does not include the excess referred to in paragraph (x) or paragraph (y) of subsection (1) of section 26:”; and
by the insertion immediately after paragraph (d) of that subsection, of the following new paragraph:-
“(dd)
the balance , if any, of any loss deductible under the provisions of this Act , of any business of any bank, financial institution or leasing company which is consolidated, acquired or merged in terms of the guidelines issued by the Central Bank of
Sri Lanka subject to conditions specified in the guidelines issued by the
Commissioner General, shall continue to be deducted, if it would have been claimed under this section prior to such consolidation, acquisition or merger, notwithstanding anything to the contrary in any other provision of this Act, but subject to the provisions of paragraph (b), from the total statutory income of the respective bank, financial institution or leasing company as a result of such consolidation, acquisition or merger;”.
s 10Amendment of section 34 of the principal enactment
Section 34 of the principal enactment as last amended by Act, No. 8 of 2014 is hereby further amended as follows:-
in subsection (2) of that section: -
in paragraph (b) of that subsection, by the addition immediately after sub-paragraph (ix), of the following new sub-paragraph:-
“(x) National Kidney Fund established under the National Kidney
Foundation of
Sri
Lanka
(Incorporation) Act, No. 34 of 2006;”;
in the paragraph (s) of that subsection, by the substitution for all the words and figures from “investment of not less than”
to the words and figures “business on or after April 1, 2011:”, of the words and figures “investment of not less than fifty million rupees in the acquisition of fixed assets made by any person on or after
April 1, 2011 but before April 1, 2014 in the expansion of any undertaking which would have been qualified for exemption under section 16C or section 17A had such undertaking commenced to carry on business on or after April 1, 2011:”;
in paragraph (u) of that subsection, by the substitution for all the words and figures from “ after April 1, 2013, then-” to the words
“whichever is lower;”, of the following words and figures:-
“after April 1, 2013, then-
such part of profits in excess of five hundred thousand rupees ;
or
for any year of assessment ended prior to April 1, 2015, one hundred thousand rupees and for any year of assessment commencing on or after April 1, 2015, two hundred and fifty thousand rupees, whichever is lower;”;
by the substitution for paragraph (v) of that subsection, of the following new paragraph:-
“(v)
such part of official emoluments arising in Sri Lanka to any individual who is not a citizen of
Sri Lanka and not resident in Sri
Lanka–
for any year of assessment commencing on or after April 1, 2013, but prior to April 1, 2015
does not exceed one hundred thousand rupees; or
for any year of assessment commencing on or after April 1, 2015
does not exceed two hundred and fifty thousand rupees;”;
by the repeal of paragraph (x) of that subsection and the substitution therefor, of the following new paragraph:-
“(x)
any expenditure incurred by any bank, any financial institution or any leasing company, by way of cost of acquisition or merger of any other bank, any other financial institution or any other leasing company, where such cost is ascertained by considering all the facts on case by case basis in accordance with the guidelines issued by the Central Bank of Sri
Lanka, in the manner specified by the Commissioner General for that purpose.”; and
in subsection (4) of that section by the insertion immediately after sub-paragraph (ix) of paragraph (b) of that subsection, of the following new sub-paragraph:-
“(x)
in respect of any qualifying payment referred to in paragraph (x) of subsection (2), on the expenditure incurred by any bank or other company referred to in that paragraph in any year of assessment shall not exceed one third of the assessable income or three hundred million rupees whichever is higher. The balance, if any, not deductible in the same year of assessment shall be carried forward and be deductible from the assessable income of such bank or other company for the next succeeding year of assessment and so on subject to the same conditions.”.
s 11Amendment of section 39 of the principal enactment
Section 39 of the principal enactment is hereby amended by the substitution for the words “The gross royalty payable”, of the words “ The gross royalty (not being royalty exempt under any other provision of this Act) payable”.
s 12Amendment of section 40B of the principal enactment
Section 40B of the principal enactment as last amended by Act, No.18 of 2013 is hereby further amended by the substitution for the words and figures “commencing on or after April 1, 2009, of any”, of the words and figures
“commencing on or after April 1, 2009 but prior to April 1,
2015, of any”.
s 13Amendment of section 40C of the principal enactment
Section 40C of the principal enactment is hereby amended in subsection (1) of that section, by the substitution for all the words and figures from “Where the taxable income”
to the words “and the rate of income tax”, of the following words and figures:-
“Where the taxable income of any individual:
being a citizen of Sri Lanka, for any year of assessment commencing on or after April 1,
2014 but prior to April 1, 2015, includes any profits from employment in the exercise of his duties as a professional; or
includes any profits from employment for any year of assessment commencing on or after
April 1, 2015,
(hereinafter in this section referred to as “relevant profits”) and the rate of income tax”.
s 14Amendment of section 45 of the principal enactment
Section 45 of the principal enactment as last amended by Act, No. 8 of 2012, is hereby further amended as follows:-
in subsection (1) of that section:-
in paragraph (b) of that subsection , for the words “tourism; or”, of the words
“tourism;”;
in paragraph (c) of that subsection , for the words “construction work;” of the words,
“construction work; or”; and
by the addition immediately after paragraph (c) of that subsection, of the following new paragraph :-
“(d)
undertaking for the manufacture of sugar;”; and
in subsection (2) of that section, by the addition immediately after paragraph (d) of that subsection, of the following new paragraph:-
“(e)
undertaking for the manufacture of sugar”
means an undertaking carried on for locally manufacturing sugar by using sugar cane or beet or any other produce exclusively cultivated locally.”.
s 15Amendment of section 46 of the principal enactment
Section 46 of the principal enactment as last amended by Act, No. 22 of 2011 is hereby further amended as follows:-
in subsection (1) of that section:-
in paragraph (b) of that subsection , for the words “tourism; or”, of the words
“tourism;”;
in paragraph (c) of that subsection , for the words “construction work;”, of the words
“construction work; or”; and
by the addition immediately after paragraph (c) of that subsection, of the following new paragraph:-
“(d)
undertaking for the manufacture of sugar,”; and
in subsection (2) of that section by the substitution for the words “profits and income from any agricultural undertaking” and “undertaking for construction work” shall”, of the words “profits and income from any agricultural undertaking” ,
“undertaking for construction work” and
“undertaking for the manufacture of sugar”, shall”.
s 16Insertion of new section 48D of the principal enactment
The following new section is hereby inserted immediately after section 48C of the principal enactment and shall have effect as section 48D of that enactment:-
48D. Notwithstanding the period specified in section 16D or paragraph (b) and (c) of subsection (2) of section 17A to complete investment and to commence the commercial operations by any new undertaking which has been approved by the Board of Investment of
Sri Lanka by entering into an agreement under section 17 of the Board of Investment of Sri
Lanka Law, No. 4 of 1978 which provides tax holiday under section 16D or section 17A of this Act, if the approval of the Board of
Investment was granted prior to October 31,
2014 and the company which invested in such undertaking is unable to complete the required investment prior to April 1, 2015 and to commence commercial operations prior to April 1, 2016 due to any practical reasons depending on the nature of the business, such period shall be extended up to April 1, 2018, if the
Commissioner-General is satisfied that the nature of the activities engaged in by such new undertaking are only activities qualified under section 16D or section 17A and the Board of Investment of Sri Lanka confirms , on request made by the investor, that the reasons for such extension is justifiable and acceptable by examining the status of the progress of such new undertaking.”.
s 17Amendment of section 56D of the principal enactment
Section 56D of the principal enactment is hereby amended as follows:-
by the substitution in that section for the words
“locally manufactured garments, bags made out of fabric, linen, curtains or any other goods,”, of the
“Extension of the period specified for the fulfilment of investment criteria by any company entered into an agreement with the
Board of
Investment of Sri Lanka under section 16D or section 17A.
words “locally manufactured garments, bags made out of fabric, linen, curtains, packing items or ceramic products,”; and
by the substitution in the proviso of that section for the words “the local value addition of such garments, bags, linen, curtains or other goods,”, of the words “the local value addition of such garments, bags, linen, curtains, packing items or ceramic products,”.
s 18Amendment of section 58 of the principal enactment
Section 58 of the principal enactment as last amended by Act, No. 8 of 2014, is hereby further amended as follows:-
by the substitution in that section for all the words from “supply of any services, to any” to the words
“foreign principal to such person in Sri Lanka”, of the following words and figures:-
“supply of-
any services to any exporter of goods or services or to any foreign principal of such exporter directly, being services which could be treated as essentially related to the manufacture of such goods or provisions of such services exported by such exporter either directly or through any export trading house;
any services provided by an agent of a ship operator to such agent’s foreign principal; or
any services provided by any freight forwarder insofar as such services are for export of goods, and the payment for such services are made by such exporter, foreign principal or the recipient of the services of the freight forwarder, to such person in Sri Lanka”; and
by the addition immediately after that section, of the following new paragraph:-
“For the purpose of this section “freight forwarder” means a person or a partnership who or which is registered with the Central Bank of
Sri Lanka under the Exchange Control Act, as a
Freight forwarder and who-
issues multi-modal documents of carriage covered by a Freight Forwarders’ “All Risks and Legal Liability Insurance Policy”; and
furnishes, together with the return of relevant turnover for any relevant quarter, copies of the statements, furnished to the
Controller of Exchange in respects of each month comprised in such relevant quarter of turnover prepared in the form specified in the Third Schedule to the Notification issued by the Controller of Exchange under section 29B of the Exchange Control Act, and net collections prepared in the form specified in the Fourth, Fifth and Sixth
Schedules to such Notification.”.
s 19Amendment of section 59B of the principal enactment
Section 59B of the principal enactment as last amended by Act, No. 8 of 2014 , is hereby further amended in paragraph (b) of subsection (2) of that section as follows:-
in sub-paragraph (ii) of that paragraph, for the words and figures “being any year of assessment commencing on or after April 1, 2013 does not exceed five hundred million rupees;”, of the words and figures “ being any year of assessment commencing on or after April 1, 2013, but prior to April 1, 2015 , does not exceed five hundred million rupees;”; and
by the addition immediately after sub-paragraph (ii)
of that paragraph, of the following new sub-paragraph:-
“(iii) being any year of assessment commencing on or after April 1, 2015, does not exceed seven hundred and fifty million rupees.”.