As enacted

Contents

Act of Parliament · As enacted

Value Added Tax (Amendment) Act 2014

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 date of operation

This Act may be cited as the Value Added Tax

(Amendment) Act, No. 7 of 2014 and shall be deemed to have come into operation on January 1, 2014.

s 2Amendment of section 3 of Act, No.14 of 2002

Section 3 of the Value Added Tax Act, No.14 of 2002

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

(a)

by the renumbering of that section as subsection (1) thereof;

(b)

in the renumbered subsection (1) of that section, by the repeal of paragraph (f) and the substitution therefor of the following:-

“(f) any person or a partnership having total supplies for any consecutive period of three months in any calendar year of not less than rupees two hundred and fifty million, including the supplies under the preceding paragraphs of this section and any supplies exempted under Part II of the First Schedule:”;

(c)

by the repeal of the second proviso to that section and the substitution therefor of the following:-

“Provided further, the chargeability to tax referring to any registered person specified in paragraph (f) shall be subject to the exemption granted under section 8, subject to the conditions specified therein:”;

(d)

immediately after subsection (1) of that section, by the insertion of the following:-

“(2) For the purposes of paragraph (f), the total supplies means, the aggregate value of supplies of-

(i)

any person or partnership engaged in the wholesale or retail business while carrying on other business of similar nature in one place or different places under one or more registrations for the purposes of this Act; and

(ii)

with regard to any subsidiary or associated company of a group of companies, engaged in the wholesale or retail business, the aggregate value of supplies of each company of the group, other than any company not engaged in the wholesale or retail business.”.

s 3Amendment of section 8 of the principal enactment

Section 8 of the principal enactment is hereby amended by the substitution for the words “in the First

Schedule to this Act as such supplies and imports are not taxable unless zero rated under section 7.” of the following:-

“in the First Schedule to this Act as such supplies and imports are not taxable unless zero rated under section 7:

Provided that, in the case of a registered person referred to in paragraph (f) of section 3 of this Act, the value of the supply of goods exempted under this Act made by such registered person directly or on behalf of any other person, which is in excess of twenty five per centum of the total supply of such registered person other than zero rated supplies and where the supply is made by the importer himself, the value of such supply of goods subject to Special Commodity Levy, shall notwithstanding the provisions contained in the

Special Commodity Levy Act, No. 48 of 2007 be deemed to be treated as liable supplies of such registered person and chargeable to tax at the rate specified in section 2 of this Act using the fraction on the tax inclusive consideration:

Provided further, in the case of a registered person -

(a)

who supplies pharmaceuticals, specified as exempted in PART II of the First Schedule to this Act; or

(b)

who supplies software dedicated products including computers and computer accessories, exceeding seventy five per centum of the total value of supplies respectively of such registered person under paragraph (a) or paragraph (b) of this proviso, as the case may be, such registered person shall not be liable to tax on any deemed liable supplies referred to in this section.”.

s 4Amendment of section 10 of the principal enactment

Section 10 of the principal enactment is hereby amended in subsection (2) of that section by the substitution for the words “is not less than rupees five hundred million”

of the words “is not less than rupees two hundred and fifty million”.

s 5Amendment of section 20 of the principal enactment

Section 20 of the principal enactment is hereby amended by the insertion immediately after the first proviso to subsection (1) of that section, of the following:-

“Provided further, any tax invoice shall not be issued on the supplies considered as deemed liable supplies referred to in section 8 of this Act.”.

s 6Amendment of section 22 of the principal enactment

Section 22 of the principal enactment is hereby amended by the insertion immediately after subsection (11)

of that section, the following:-

“(12) in the case of a person engaged in the insurance business and carrying on both long term insurance business and general insurance business, and who segregates such long term insurance business and the general insurance business into two separate companies, as required by section 53 of the Regulation of Insurance

Industry (Amendment) Act, No. 3 of 2011, the balance, if any, of the amount unabsorbed input credit relating to the business of general insurance as at the date of such segregation, shall notwithstanding anything to the contrary in any other provision of this Act, but subject to the preceding provisions of this section, be treated as an unabsorbed input credit by the company carrying on the general insurance business after such segregation.

(13)

any unabsorbed input credit of any bank established under the Banking Act, No.30 of 1988 or

Finance Company licensed under the Finance Business

Act, No.42 of 2011, relating to the liable business of such bank or finance company as at the date of acquisition or merger of such bank or finance company, as the case may be, shall be allowed to be claimed subject to the provisions of this Act, and in accordance with the guidelines issued by the Central Bank for this purpose.”.

s 7Amendment of section 25C of the principal enactment

Section 25C of the principal enactment is hereby amended in subsection (4) by the repeal of that subsection and the substitution therefor of the following:-

“(4) Notwithstanding anything contained in subsection (1), any person to whom this Chapter applies-

(a)

may in writing communicate to the

Commissioner-General, his intention to calculate subject to the provisions of subsection (5), the tax to which he is liable in respect of any month commencing on or after

July 1, 2003 but for the period prior to January 1, 2014. The provisions of subsection (5)

shall however be applicable for the period subsequent to the communication in writing to the Commissioner-General which communication shall not be revocable.

(b)

shall for any month commencing from

January 1, 2014, be subject to the provisions of subsection (5).”.

s 8Amendment of section 25D of the principal enactment

Section 25D of the principal enactment is hereby amended by the substitution for the words “a tax credit shall be allowed” of the words and figures “a tax credit shall be allowed for any taxable period prior to January 1, 2014”.

s 9Amendment of section 40 of the principal enactment

Section 40 of the principal enactment is hereby amended by the repeal of paragraph (iii) of the proviso to that section and the substitution therefor of the following:-

“(iii) as regards movable property –

(a)

for any taxable period ending prior to January 1, 2014, where tax for more than four taxable periods is in default, the tax for four taxable periods only to be selected by the

Commissioner-General shall rank in priority to any lien or encumbrance created bona fide for value prior to the date of default of such tax; and

(b)

for any taxable period commencing on or after January 1, 2014, where the tax for more than taxable periods for five years is in default, the tax for taxable periods within five years only to be selected by the Commissioner-General, shall rank in priority to any lien or encumbrance created bona fide for value prior to the date of default of such tax.”.

s 10Amendment of section 71 of the principal enactment

Section 71 of the principal enactment is hereby amended by the repeal of item (ii) of subsection (2) of that section and the substitution therefor of the following:-

“(ii) (a) ten per centum for the period prior to January 1, 2014;

(b)

Six per centum for any period from or after

January 1, 2014

of the tax collected by the Director-General of

Customs on importation of goods referred to in subsection (3) of section 2 on or before the fifteenth day of the month immediately succeeding that month and each month thereafter.”.

s 11Amendment of section 83 of the principal enactment

Section 83 of the principal enactment is hereby amended in the definition of the expression “international transportation” by the addition immediately after paragraph (c) thereof, of the following new paragraph:-

“(d)

from an international airport in Sri Lanka to another international airport in Sri Lanka by way of air transportation.”.

s 12Amendment of the First Schedule of the principal enactment

The First Schedule to the principal enactment is hereby amended in Part II thereof as follows:-

(1)

in paragraph (a) of that Part, -

(a)

by the repeal of item (i) and the substitution therefor of the following:-

“(i) wheat, wheat flour or powdered milk;”;

(b)

by the repeal of item (iii) and the substitution therefor of the following:-

“(iii) ayurvedic preparations which belong to the Ayurveda Pharmacopoeia or ayurvedic preparations (otherthan cosmetic preparations) or unani, siddha or homeopathic preparations (other than cosmetic preparations identified under the Harmonized Commodity

Description and Coding System

Numbers for custom purposes) and raw materials for such preparations with the recommendation of the Commissioner of Ayurveda;”;

(c)

by the repeal of item (viii) and the substitution therefor of the following:-

“(viii)

agricultural tractors or road tractors for semi-trailers prior to January 1,

2014;”;

(d)

in item (xxii), by the repeal of sub item (vi)

and the substitution therefor of the following:-

“(vi) bowsers, bulldozers, graders, levelers, excavators, firefighting vehicles, gully bowsers, semi-trailers for road tractors, machinery, equipment used for garbage disposal activities or garbage trucks;”;

(e)

by the addition immediately after item (vii)

the following new item:-

“(viii) ties and bows or designer pens;”;

(f)

by the addition immediately after item (xxiii)

of the following items:-

“(xxiv) frozen bait, fish hooks/rods/ reels , fishing tackle and marine propulsion engines identified under the

Harmonized

Commodity

Description and Coding System

Numbers for Custom proposes.;

(xxv)

copper cables for telecom industry -

- imported where such copper cables are not available is Sri Lanka; or -

-purchased from a local manufacturer.”.

(2)

in paragraph (b) of that Part:-

(i)

by the repeal of item (xiii) and the substitution therefor of the following item:-

“(xiii) imported unprocessed timber logs, ships , rattans or any article subject to the Special Commodity Levy under the Special Commodity Levy

Act, No. 48 of 2007 subject to the condition that such goods are sold by the importer himself without any processing except adaptation for sale;”;

(ii)

by the repeal of item (xxxi) and the substitution therefor of the following:-

“(xxxi) telecommunication services subject to the telecommunication levy under the Telecommunication

Levy Act, No. 21 of 2011;”;

(iii)

by the addition immediately after item (xLvi)

of the following new items:-

“(xLvii) desiccated coconut, rubber, latex, tea including green leaf, rice, rice flour, bread, eggs , liquid milk so far as such products are manufactured locally;

(xLviii)

machinery or equipment for tea or rubber industry or agricultural tractors or road tractors for semi-trailers, so far as such products are manufactured locally;

(xLix)

services by any headquarters or regional head offices of institutions in the international network relocated in Sri Lanka as exempted for income tax purposes under section 7 of the Inland Revenue

Act, No. 10 of 2006, so far as such receipts are in foreign currency received.

(L)

locally manufactured ayurvedic preparations which belong to the

Ayurveda Pharmacopoeia or

Ayurveda preparations (other than cosmetic preparations) or unani, siddha or homeopathic preparations (other than cosmetic preparations).”.

(3)

in item (xvi) of paragraph (c) of that Part by the substitution for the words “machinery identified under” of the words and figures “machinery prior to January 1, 2014 identified under”.

s 13General amendment to the principal enactment

In the principal enactment, -

(a)

by the substitution for the word “Commissioner”

wherever that word appears of the words “Senior

Commissioner”;

(b)

by the substitution for the words “Deputy

Commissioner” wherever such words appear of the word “Commissioner”;

(c)

by the substitution for the word “Senior Assessor”

wherever such word appears of the words “Senior

Commissioner” or “Deputy Senior Commissioner”;

(d)

by the substitution for the word “Assessor”

wherever such word appears of the words “Assessor”

or “Assistant Commissioner”.

s 14Validation

Any person who is authorized to collect the Value

Added Tax as provided for in this Act during any period commencing from January 1, 2014 and ending on the date on which the Certificate of the Speaker is endorsed in respect of this Act shall be deemed to have acted with due authority and such collection shall be deemed to have been, and to be, validly made and such person is hereby indemnified against all actions civil or criminal, in respect of such collection :

Provided that, the aforesaid provisions shall not affect any decision or Order made by any Court or any proceedings pending in any Court in respect of any tax collected as provided for in this Act during such period.

s 15Sinhala text to prevail in case of inconsistency

In the event of any inconsistency between the

Sinhala and Tamil texts of this Act, the Sinhala text shall prevail.