Value Added Tax (Amendment) Act 2003 · As enacted
8. Insertion of new Chapter IIIA in the principal enactment
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
The following new Chapter is hereby inserted immediately after Chapter III and shall have effect as Chapter
IIIA of the principal enactment :—
“CHAPTER IIIA
IMPOSITION OF VALUE ADDED TAX ON THE SUPPLY OF FINANCIAL
SERVICES BY SPECIFIED INSTITUTIONS
25A. (1) Notwithstanding the provisions of
Chapter I, II, III and item (xi) of the First
Schedule to this Act, a Value Added Tax
(hereinafter in this Chapter referred to as “the tax”) shall be charged in accordance with the provisions of this Chapter with effect from
January 1, 2003, on the supply of financial services in Sri Lanka, made by any specified institution which carries on a business of supplying such financial services.
Every specified institution, carrying on the business of supplying any financial service in Sri Lanka, shall be required to be registered where the value of such supply for a period of three months exceeds five hundred thousand rupees or for a period of twelve months one million eight hundred thousand rupees, as the case may be.
Every specified institution, required to be registered under subsection (2), shall make an application for registration in the specified form to the Commissioner-General not later than ten days from the date of commencement of this
Act :
Provided however any institution registered under this Act and which is a specified institution within the meaning of this Chapter, shall be deemed for all purposes to be a registered specified institution.
Charge of value added tax on the supply of financial services by specified institutions.
The Commissioner-General shall upon such registration issue, to such registered specified institution —
a tax registration number ; and
a certificate of registration :
Provided however any institution deemed to be registered under this Chapter, shall not be issued with a tax registration number and a certificate of registration, under this Chapter.
25B. The taxable period of every registered specified institution shall be one month and a return in the form specified shall be furnished for each month before the end of the following month.
25C.
tax
Every registered specified institution under this Chapter shall be liable to tax for each taxable period on its total value addition of such institution which includes the net profits or loss, as the case may be, before payament of income tax on such profit computed in accordance with accepted accounting standards, subject to an adjustment for economic depreciation, determined by the Minister having regard to the interest of economy by order published in the
Gazette, and the emoluments payable to all the employees of such institution :
Provided however where the amount of profits for each taxable period cannot be accurately ascertained, such amount may be estimated on the basis of available information.
The estimated amounts shall be adjusted to reflect the actual amount on half yearly basis.
Emoluments paid to all the employees shall include—
in the case of “specified employees”
under Chapter XIV of the Inland Revenue
Act, No. 38 of 2000, the gross
Monthly taxable period.
Calculation of remuneration payable to such employees and reflected in the pay sheet maintained under paragraph (a) of section 110 of the
Inland Revenue Act, No. 38 of 2000; and
in the case of an employee other than a
“specified employee” the gross remuneration paid to such employee reflected in the pay sheet maintained under subsection (2).
Every registered specified institution shall maintain a pay sheet in respect every employee, other than a specified employee, in the manner set out by the Commissioner-General under section 110 of the Inland Revenue
Act, No. 38 of 2000.
The amount of tax payable for each month shall be ten percentum of the value additions specified in subsection (1).
25D. Where any registered specified institution has paid any tax under any other provision of this Act, other than this Chapter, a tax credit shall be allowed on an amount equal to such tax paid against the tax payable under this Chapter, where in the opinion of the
Commissioner-General there is no material difference in the recognition of receipts of such institution for the calculation of profits for the purposes of this Chapter and for the purposes of the calculation of taxable supplies under any other provisions of this Act :
Provided however, only fifty percentum of any such tax paid under any other provision of this Act other than under this Chapter, in relation to tax calculated as provided in section 22 at the standard rate shall be deducted against the tax payable under this Chapter.
Tax credit.
25E. The provisions of Chapters IV to XVI shall, mutatis mutandis, be applicable in respect of the tax charged under this Chapter.
25F. For the purposes of this Chapter —
supply of financial services means —
the operation of any current, deposit or savings account;
the exchange of currency ;
the issue, payment, collection or transfer of ownership of any note, order for payment, cheque or letter of credit ;
the issue, allotment, transfer of ownership, drawing, acceptance or endorsement of any debt. security, being any interest in or right to be paid money owing by any person ;
the issue, allotment, transfer of ownership of any equity security or a participatory security ;
underwriting or sub-underwriting the issue of any equity security, debt security or participatory security ;
the provision of any loan, advance or credit;
the provision —
of the facility of instalment credit finance in a hire purchase conditional sale or credit sale agreement for which facility a separate charge is made and disclosed to the person to whom the supply is made ;
Chapters IV to
XVI to be applicable to registered specified institutions under this
Chapter.
Interpretation.
goods under any hire purchase agreement or conditional sale or hire purchase agreement while have been used in Sri Lanka for a period not less than twelve months as at the date of such agreement ;
specified institution means —
a licenced commercial bank within the meaning of the Banking Act, No. 30 of 1988;
a finance company registered under the
Finance Companies Act, No. 78 of 1988 ;
a licenced specialized bank within the meaning of the Banking Act, No. 30 of
1988. ’.