2. Amendment of section 2…

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

Section 2 of the Value Added Tax Act, No. 14 of 2002

(hereinafter referred to as the “principal enactment”) is hereby further amended as follows :—

(1)

in subsection (1) of that section—

(a)

by the substitution for all the words and figures from “as the case may be” to the end of subparagraph (ii) thereof of the following :—

“as the case may be —

(i)

for any taxable period commencing on or after August 1, 2002, but prior to

January 1, 2004,

(A)

at the rate of ten per centum (of which the Tax Fraction is 1/11) on the value of goods and services referred to in the Second Schedule, which are chargeable with the tax other than zero rated supplies ;

(B)

at the rate of twenty per centum (of which the Tax Fraction is 1/6) on the value of all other taxable goods and services which are chargeable with the tax other than zero rated supplies.

(ii)

for any taxable period commencing on or after January 1, 2004 at the rate of fifteen per centum (of which the Tax

Fraction is 3/23 on the value of such goods and services supplied or imported, as the case may be, other than such goods and services chargeable with tax at zero per centum.” ; and

(b)

by the substitution of the words and figures

“subsection (3) of section 2.” of the following words and figures :—

“subsection (3) of section 2 :

Provided further the tax payable on any taxable supply made on or after January 1, 2004, being a supply under an agreement which is not subject to review, not being a hire purchase agreement, entered into on or before

Decemeber 31, 2003, and where such supply has been specifically identified within such agreement, shall be computed at the tax rate prevailing at the time of entering into such agreement, notwithstanding the provisions of subsection (9) of section 5.”.

(2)

by the repeal of subsection (2) of that section and the substitution therefor of the following subsection :—

“(2) Notwithstanding the provisions of subsection (1) the Commissioner-General shall defer the payment of tax due—

(a)

on any tea supplied by any manufacturer of tea, registered with the Sri Lanka Tea Board established by the Sri Lanka Tea Board Law,

No. 14 of 1975, to any registered broker for sale at the Colombo Tea Auction and where such tea is purchased by any exporter of tea registered with the Sri Lanka Tea Board established by the Sri Lanka Tea Board Law,

No. 14 of 1975, until such time such tea broker furnishes the reconciliation on the disposal of such tea, as stipulated by the Commissioner-General ;

(b)

on the supply of any taxable goods or services by a registered person to any other person who has entered into an agreement as a contractor to supply any goods or services to any

Government department, utilizing funds provided by any foreign government or donor agency approved by the Minister, having regard to the interest of the national economy, where the value of such goods or services exceeds rupees twenty thousand, for a period of three months, from the end of the month in which such goods or services were purchased by such contractor.

The registered person to whom a deferment is granted under paragraph (b) shall not be required to account for the output tax on such supplies until he recovers the tax due on such supplies.”.

(3)

in subsection (3) of that section by the substitution in paragraph (b) of the second proviso thereof, for the words “equipment of high value” of the words “equipment of high value or any goods to be used as exhibition materials or as materials in any technical demonstration”.

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