6. Tax on the lands leased out to foreigners

Official English translation. The Sinhala text prevails.

(1)

There shall be a Land Lease Tax payable up-front by the Lessee, for every lease of land, in terms of section 5(1), at the execution of the indenture of lease or prior to such execution unless exempted under section 7.

(2)

The rate of such Land Lease Tax shall be fifteen per cent of the total rental payable for the entire duration of the lease.

(3)

Notwithstanding the provisions of subsection (2), the

Land Lease Tax shall be 7.5 per cent of the total rental payable for the entire duration of the lease in respect of —

(a)

any land leased to a company referred to in section 5(1)(b), provided that such company has been in active operation in Sri Lanka for a consecutive period of not less than ten years, immediately prior to the date of the indenture of lease;

(b)

any land leased to a subsidiary of a holding company incorporated in Sri Lanka under the

Companies Act, in which the shareholding of the holding company in such subsidiary is fifty per cent or above and any foreign shareholding in the holding company is fifty per cent or above, provided that such holding company has been in active operation in Sri Lanka for a period of not less than ten (10) consecutive years, immediately prior to the date of indenture of lease:

Provided however, where the shareholding of the holding company in the subsidiary, becomes less than fifty per cent the Land Lease Tax applicable in respect of such lease shall be fifteen per cent for the balance period of lease, with effect from the date of reduction of the shareholding;

(c)

a condominium parcel situated on or above the fourth floor of a building specified under the provisions of the Apartment Ownership Law, where the period of lease is less than thirty five years;

(d)

a condominium parcel situated below the fourth floor of a building specified under the provisions of the Apartment Ownership Law, where the period of lease is not more than ninety nine years;

(e)

the lease of any land in terms of section 5, situated within—

(i)

a Licensed Zone declared under the Board of Investment of Sri Lanka Law, No. 4 of 1978; or

(ii)

a Tourist Development Area declared under the Tourism Act, No. 38 of 2005 or Tourist

Development Act, No. 14 of 1968; or

(iii)

an Industrial Estate established under the

Industrial Development Act, No. 36 of 1969; or

(iv)

an area declared by the Minister by regulations as an area, for which the reduced tax rate is applicable;

(f)

any land leased to a company referred to in section 5(1)(b), where the Cabinet of Ministers decides having taken into consideration that a substantial foreign envestment has already been realized by

Land (Restrictions on Alienation)

such company into the related sector that such reduced tax rate is justifiable in order to ensure level playing field among its competitors in the related sector.

(4)

The Lessee referred to in subsection (1) shall be liable in addition to the Land Lease Tax, to pay the applicable stamp duty under the Stamp Duty Act, No. 43 of 1982 and any other tax or charge payable in respect of any such transaction under any applicable written law in force for the time being.

(5)

The Land Lease Tax shall be paid in a manner as may be prescribed.

Read on from s 7