Inland Revenue Act 2017 · පනවන ලද පරිදි · Part I
76. Profits and income or loss from international transactions between associates
නිල ඉංග්රීසි පරිවර්තනය. සිංහල පාඨය බලපවත්වයි. නිල Sinhala පාඨය විවෘත කරන්න, documents.gov.lk හි නිල PDF
නිල පරිවර්තනයවෙනස් නොකළ පාඨය, Department of Government Printing වෙතින්
Any income, gains and profits arising in, derived or accruing from, or any loss incurred by any person in
Sri Lanka engaged in any international transaction entered into with its associated enterprises shall be ascertained having regard to the arm’s length price.
For the purpose of this section –
any business organization that has a permanent establishment in Sri Lanka shall be deemed to be a person for the ascertainment of the income, gains or profits arising in or derived from or any loss incurred in Sri Lanka from such permanent establishment;
“permanent establishment” –
in relation to a country with which an agreement has been entered into on avoidance of double taxation means, a permanent establishment defined in an agreement for the relief of double taxation where an agreement is in force between the government of Sri Lanka and the government of any territory in which any person and their agencies, branches or establishments in Sri Lanka is resident; or
in relation to a country with which an agreement has not been entered into on avoidance of double taxation, includes any business connection or a fixed place of business through which the business of the enterprise is wholly or partly carried out irrespective of the number of days of such business carried out in Sri Lanka;
any income, gains or profits arising, derived or accruing from, or any loss incurred in any transaction between a permanent establishment and its head office or other related branches in
Sri Lanka, in which case the permanent establishment shall be treated as a distinct and separate entity from its head office and related branches, shall be ascertained having regard to the arm’s length price; and
“international transaction” means a transaction between two or more associated enterprises, either one or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, lending or borrowing of money or any other transaction having a bearing on the income, gain or profits, losses or assets of such associated enterprises, and includes any allocation or apportionment of, or any contribution to any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such associated enterprises under any mutual agreement or arrangement between two or more such associated enterprises.
Any transaction entered into by an enterprise with a person, other than an associated enterprise shall, for the purposes of subsection (1) be deemed to be an international transaction entered into between two associated enterprises, if there exists a prior agreement between such enterprises and other person and, by which the terms of such transaction are determined in substance between such enterprises and other person which results in the reduction of or would have the effect of reducing the amount of tax payable.
Without prejudice to the generality of the provision of this subsection, the allowance for any expense or interest arising from an international transaction shall also be determined having regard to the arm’s length price.
Where it appears to the Transfer Pricing Officer that the income, gain or profits or the loss referred to in subsection (1), have not been ascertained having regard to the arm’s length price, he may initiate a transfer pricing audit.
Where it appears to an Assistant Commissioner in the course of his audit that the income, gain, profits or the loss referred to in subsection (1) have not been ascertained having regard to the arm’s length price he shall refer to the Transfer
Pricing Officer for the determination of arm’s length price and if the Transfer Pricing Officer decides to proceed with a transfer pricing audit he shall initiate such transfer pricing audit.
When determining the arm’s length price, the Transfer
Pricing Officer may in writing addressed to the person referred to in subsection (1) require him to prove to the satisfaction of the Transfer Pricing Officer, that such income, gain or profits or such loss, as the case may be, has in fact been ascertained having regard to the arm’s length price. Where such person fails to so prove, the Transfer Pricing Officer may determine, the arm’s length price.
For the purposes of subsection (1), a Transfer Pricing
Officer may give notice in writing to any person requiring him to furnish within the period specified in such notice, information in relation to any transactions between such person and any other persons.
The arm’s length price shall be determined in accordance with the arm’s length principle and on the basis of the application of the most appropriate method as specified for that purpose.
After determining arm’s length price of the cases initiated under paragraph (a) or (b) of subsection (2), Transfer
Pricing Officer shall prepare a preliminary order determining the arm’s length price and refer to the Technical Review
Committee which is appointed by the Deputy
Commissioner-General of the subject of transfer pricing, for review.
The Technical Review Committee shall review the determined arm’s length price in the preliminary order and shall confirm, reduce or enhance the arm’s length price and refer to the Transfer Pricing Officer –
a final order, if all the members of the Committee are in agreement; or
an interim order in any other circumstances where all the members of the Committee are not in agreement.
Transfer Pricing Officer shall communicate the final order or the interim order as the case may be to such person.
A person, who is dissatisfied with the interim order may communicate his dissatisfaction to the Dispute
Resolution Panel referred to in section 78 of this Act and the
Dispute Resolution Panel shall issue a final order under subsection (4) of section 78.
Where person or partner of a partnership has not communicated their dissatisfaction on an interim order received to the Dispute Resolution Panel, the interim order shall be deemed to be a final order.
The Transfer Pricing Officer shall, subject to the provisions of section 135, assess the amount of income, gain or profits and issue assessment in accordance with the final order of the Technical Review Committee or the Dispute
Resolution Panel as the case may be.
Such person or partner of a partnership who is aggrieved by such assessment made based on the final order, may within thirty days of the notice of assessment make an appeal to the Commissioner-General under Chapter XIII.
The provisions of this section shall not apply in a case where the computation of income under subsection (2) has the effect of reducing the income, gain or profits chargeable to tax or increasing the loss, as the case may be, computed on the basis of entries made in the books of account in respect of any year of assessment in which the international transaction was entered into.
Notwithstanding anything to the contrary in any other section of this Act or any other law, no exemption or tax benefit provided under any of the provisions of this Act or any other law, shall be granted in respect of the amount of income, gain or profits by which the total income, gain or profits of the associated enterprises is increased after the computation of income, gain or profits under this section and in accordance with the arm’s length price.
An advance pricing agreement may be entered into between any person and the Commissioner-General in respect of arm’s length price for the purposes of this section in the manner that may be specified.
The determination of arm’s length price referred to in subsection (1) may be subject to safe harbor rules specified by the Commissioner-General.