6. Insertion of new Chapter IIIB in the principal enactment

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

The following new Chapter is hereby inserted immediately after Chapter IIIA of the principal enactment and shall have effect as Chapter IIIB (sections 25H and 25I) of that enactment :—

“CHAPTER IIIB

25H. (1) A tax (hereinafter referred to as

“optional value added tax”) shall be charged on the aggregate turnover from each taxable activity carried on, or carried out, in Sri Lanka by a person or a partnership, if such person or partnership is registered under this Chapter in accordance with the provisions of this Chapter for every quarter commencing on or after

January 1, 2007, at the rate of five per centum.

(2)

For the purposes of this Chapter

“turnover” in relation to any taxable activity means the total amount received or receivable from transactions entered into in respect of the taxable activities carried on, or carried out, in

Sri Lanka, other than any supply specified in the First Schedule, or zero rated supplies referred to under section 7, or supplies referred to in section 3 of the Act or to the sale of any capital assets.

Imposition of optional value added tax.

(3)

In this subseciton —

“capital assets” shall have the same meaning as is given to it in section 25 of the Inland Revenue

Act, No. 10 of 2006.

“quarter’ means the period of three months commencing on the first day of January, the first day of April, the first day of July and the first day of October of each year.

25I. (1) A person or a partnership referred to in subsection (2), may apply for registration under this Chapter and—

(a)

the Commissioner General shall, if he is satisfied that the conditions specified in subparagraphs (i) and (ii) of paragraph (a)

of subsection (2) are complied with, register such person or partnership on a request made for registration and shall forthwith assign a registration number to such person or partnership ;

(b)

such registration shall be valid for a period of three years from the date of commencement of the quarter in which the registration is obtained or up to the end of the quarter in which the aggregate turnover of such person or partnership exceeds rupees two million and five hundred thousand per year, whichever occurs first.

(2)

(a) the provisions of subsection (1) shall apply to any person or partnership—

(i)

whose agregate turnover from every taxable activity carried on or carried out, does not exceed rupees two million and five hundred thousand per year or six hundred and twenty five thousand per quarter; and

Registration.

(ii)

who or which is not registered under

Chapter II.

(b)

Any person or partnership registered under this Chapter may apply to the

Commissioner-General to cancel such registration and further request the

Commissioner-General to register him under

Chapter II, at any time during the period in which registration under this Chapter subsists.

(c)

The provisions of Chapters I, II, III or

IIIA shall not apply to a person or partnership whose registration during the period is subsisting under this Chapter.”.

Read on from s 7