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PARLIAMENT OF THE DEMOCRATICSOCIALIST REPUBLIC OF

SRI LANKA

INLAND REVENUE (AMENDMENT)ACT, No. 8 OF 2014

Printed on the Order of Government

[Certified on 24th April, 2014]

PRINTED AT THE DEPARTMENT OF GOVERNMENT PRINTING, SRI LANKA

TO BE PURCHASED AT THE GOVERNMENT PUBLICATIONS BUREAU, COLOMBO 5

Price : Rs. 45.00 Postage : Rs. 20.00

Published as a Supplement to Part II of the Gazette of the DemocraticSocialist Republic of Sri Lanka of April 25, 2014

1Inland Revenue (Amendment) Act, 8 of 2014

Short title andthe dateof operation.

2—PL 008093—2900 (03/2014)

[Certified on 24th April, 2014]

L.D.—O. 5/2014

AN ACT TO AMEND THE INLAND REVENUE ACT, NO. 10 OF 2006

BE it enacted by the Parliament of the Democratic SocialistRepublic of Sri Lanka as follows:—

1. This Act may be cited as the Inland Revenue(Amendment) Act, No. 8 of 2014, and shall be deemedfor all purposes to have come into operation onApril 1, 2014.

2. The Inland Revenue Act, No. 10 of 2006 (hereinafterreferred to as the “principal enactment”) as last amended byAct, No.18 of 2013 is hereby further amended as follows:-

(1) by the substitution for the words “Senior DeputyCommissioner-General” wherever such words occurin the principal enactment, of the words “AdditionalCommissioner-General”;

(2) by the substitution for the word “Commissioner”wherever such word occurs in the principalenactment, of the words “Senior Commissioner”;

(3) by the substitution for the words “DeputyCommissioner” wherever such words occur in theprincipal enactment, of the word “Commissioner”;

(4) by the substitution for the words “Senior Assessor”wherever such words occur in the principalenactment, of the words “Deputy Commissioner orSenior Deputy Commissioner”; and

(5) by the substitution for the word “Assessor”wherever such word occurs in the principalenactment, of the words “Assessor or AssistantCommissioner”.

Amendmentof Act, No. 10of 2006.

2 Inland Revenue (Amendment) Act, 8 of 2014

3. Section 7 of the principal enactment as last amendedby Act, No. 18 of 2013 is hereby further amended as follows:-

(1) in paragraph (b) of that section –

(a) by the substitution in sub-paragraph (lxviii),for the words and figures “Companies Act,No. 17 of 1982; and”, of the words and figures“Companies Act, No. 17 of 1982;”;

(b) by the substitution in sub-paragraph (lxix),for the words “the circulars issued by suchMinistry.”, of the words “the circulars issuedby such Ministry;”; and

(c) by the addition, immediately after sub-paragraph (lxix), of the following new sub-paragraphs:-

“(lxx) the National EnterpriseDevelopment Authority establishedunder the National EnterpriseDevelopment Authority Act, No. 17of 2006;

(lxxi) the Sri Lanka Institute of Marketingincorporated under the Sri LankaInstitute of Marketing(Incorporation) Act, No. 41 of 1980;

(lxxii) the Institute of Physics, Sri Lankaincorporated under the Institute ofPhysics, Sri Lanka (Incorporation)Act, No. 12 of 1986;”; and

(lxxiii) the Lionel Wendt Memorial Fundincorporated under section 114 ofthe Trusts Ordinance (Chapter 87).”;

(2) by the substitution in paragraph (k) of that section,for the words ''for such year of assessment", of thewords ''for the year of assessment immediatelypreceding such year of assessment";

Amendment ofsection 7 of theprincipalenactment.



(3) by the substitution in paragraph (l) of that section,for the words and figures “the Monetary Law Act(Chapter 422).”, of the words and figures “theMonetary Law Act (Chapter 422);”; and

(4) by the addition immediately after paragraph (l) ofthat section, of the following new paragraph :-

“(m) the profits and income of any institution,established on or after April 1, 2013, byrelocating in Sri Lanka the headquartersor regional head offices of institutions inthe international network, as specified bythe Commissioner-General by Noticepublished in the Gazette.”.

4. Section 8 of the principal enactment as last amendedby Act, No. 18 of 2013 is hereby further amended insubsection (1) of that section as follows:-

(1) by the substitution in paragraph (s) of thatsubsection, for the words “any allowance paid inlieu of the provision of such vehicle,”, of the words“the aggregate of any allowance paid in lieu of theprovision of such vehicle and the value of anytransport facility as may be specified by theCommissioner-General by Order published in theGazette,”;

(2) by the substitution in paragraph (w) of thatsubsection, for the words “not resident in Sri Lanka.”,of the words “not resident in Sri Lanka;”; and

(3) by the addition immediately after paragraph (w) ofthat subsection, of the following new paragraph:-

“(x) the profits and income not exceeding fortyeight thousand rupees for any year ofassessment, if the aggregate of such profitsand income is not more than forty eightthousand rupees other than anyemployment income or any profits andincome which is taxable at source as final



tax, of any individual who is an employeeand who is not engaged in any trade,business, profession or vocation, if tax isdeducted from his employment income forthat year of assessment.”.


(1) by the substitution in paragraph (a) of that section,for all the words from “to the Government of Sri Lanka” tothe words, “to any other undertaking,”, of the words “to anyperson or partnership in Sri Lanka, notwithstanding whethersuch company, partnership or body of persons has apermanent establishment or any business connection in SriLanka,”; and

(2) by the substitution in paragraph (k) of that section,for the words “Treasury Bond Investment External RupeeAccount;”, of the words “Securities Investment Account;”.

6. Section 10 of the principal enactment as last amendedby Act, No. 8 of 2012 is hereby further amended in subsection(1) of that section as follows :-

(1) by the substitution in the proviso to paragraph (k)of that subsection, for the words “within one yearthereafter.”, of the words “within one yearthereafter;”; and

(2) by the insertion immediately after paragraph (k) ofthat subsection, of the following new paragraph :-

“(l) any dividend paid to a shareholder of acompany out of such dividend as isreferred to in paragraph (j), received bythat company, if the first mentioneddividend is paid within three months ofthe receipt of the second mentioneddividend by that company.”.

Amendmentof section 10of the principalenactment.



(1) by the insertion immediately after paragraph(yyyyyyy) of that section, of the following newparagraph :-

“(yyyyyyyy) the profits and income of any personresident in Sri Lanka who acquiresany internationally recognizedintellectual property on or after April1, 2014 and who earns profits andincome by way of royalty out ofsuch intellectual property, if suchroyalty is received in foreigncurrency and remitted to Sri Lankathrough a bank;”; and

(2) by the insertion immediately after paragraph(zzzzzzz) of that section, of the following newparagraph :-

“(zzzzzzzz) the profits and income arising oraccruing to any company,partnership or body of persons in acountry outside Sri Lanka, from anypayment made for the use of anycomputer software, by Sri LankanAir Lines Ltd or Mihin Lanka (Pvt)Ltd, as a special requirement of suchAirlines, if a Double TaxationAvoidance Agreement providingrelief for double taxation of suchprofits and income is not in forcebetween Sri Lanka and that countryor tax is not payable in such countryon such profits and income.”.



8. Section 16D of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedby the substitution for the words and figures “any newundertaking established on or after April 1, 2012 and”, ofthe words and figures “any new undertaking established onor after April 1,2012, but prior to April 1, 2015 and”.

9. Section 16E of the principal enactment is herebyamended by the substitution for the words “organicfertilizers,”, of the words “organic fertilizers or biologicalfertilizers,”.

10. Section 17A of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedin subsection (2) of that section, by the substitution for allthe words and figures from “the development of nationaleconomy ;” to the end of that section, of the following wordsand figures:-

“the development of national economy ;

(b) in which the sum invested in the acquisition of fixedassets after March 31, 2011 but prior to April 1, 2015is not less than the corresponding sum specified inColumn I of the Schedule to subsection (1);

(c) which commences commercial operations on orafter April 1, 2011, but prior to April 1, 2016; and

(d) which is not formed by the splitting up orreconstruction or acquisition of any business whichwas previously in existence.

For the purpose of this section “the investment” meansthe cost of any land, plant, machinery, equipment andother fixed assets.”.

11. Section 22 of the principal enactment as lastamended by Act, No. 9 of 2008 is hereby further amended insubsection (1) of that section, by the substitution for thewords “with an investment of not less than two million rupees

Amendment ofsection 17A

of the principalenactment.

Amendment ofsection 22of the principalenactment.

Amendment ofsection 16D


Amendment ofsection 16E



made within one year from the commencement of suchundertaking,”, of the words and figures “with an investmentof not less than two million rupees, made within one yearfrom the commencement of such undertaking, but prior toApril 1, 2014,”.

12. Section 25 of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedin subsection (1) of that section as follows:-

(1) by the substitution in paragraph (u) of thatsubsection, for the words “to the Government.”, ofthe words “to the Government;”; and

(2) by the addition immediately after paragraph (u) ofthat subsection, of the following new paragraphs:-

“(v) the cost of acquisition of anyinternationally recognized intellectualproperty used for producing such profitsand income;

(w) any royalty or ground rent paid by suchperson.”.

13. Section 26 of the principal enactment as lastamended by Act, No.18 of 2013 is hereby further amendedas follows:-

(1) in subsection (1) of that section-

(a) by the substitution in sub-paragraph (vi) ofparagraph (l) of that subsection, for the wordsand figures “Finance Act, No. 5 of 2005,”, ofthe words and figures “Finance Act, No. 5 of2005; or”;

(b) by the insertion immediately after sub-paragraph (vi) of paragraph (l) of thatsubsection, of the following new sub-paragraph:-

“(vii) any Crop Insurance Levy leviedunder section 14 of PART IV of theFinance Act, No. 12 of 2013,”;




(c) by the substitution for paragraph (m) of thatsubsection, of the following paragraph:-

“(m) any annuity paid by such person;”;and

(2) by the substitution in subsection (4) of that section,for all the words from “any part thereof,” to thewords “assessment is made:”, of the words “anypart thereof, and an assessment shall be madedisallowing the entirety or any part of suchexpenditure notwithstanding anything to thecontrary in any other provisions of this Act, if itappears to the Assessor that the debt or such partthereof attributable to such expenditure or any partthereof, remains unpaid at the time such assessmentfor that year of assessment is made:”.


(1) in subsection (5) of that section –

(a) by the substitution in paragraph (a) of thatsubsection, for the words and figures“annuity, ground rent, royalty or interest notdeductible under section 25.”, of the wordsand figures “annuity or interest, notdeductible under section 25.”; and

(b) by the insertion immediately after paragraph(c) of that subsection, of the following newparagraph:-

“(cc) Where any person who is engagedin carrying on both life insurancebusiness and general insurancebusiness segregates such lifeinsurance business and the generalinsurance business into two separatecompanies, as required by section 53of the Regulation of InsuranceIndustry (Amendment) Act, No. 3 of2011, incurred any loss prior to such

Amendment

of section 32

of the principal

enactment.


segregation of which the entirety orany part thereof had not beendeducted previously, the balance, ifany, as at the date of such segregationshall, notwithstanding anything tothe contrary in any other provisionof this Act, but subject to theprovisions of paragraph (b), bededucted from the total statutoryincome of the respective companiesin the following manner:-

(i) such part of the loss asattributable to the life insurancebusiness, from the total statutoryincome of the company whichcarries on long term insurancebusiness;

(ii) such part of the loss asattributable to the generalinsurance business, from the totalstatutory income of the companywhich carries on generalinsurance business.”; and

(2) by the substitution in paragraph (a) of subsection(6) of that section, for the words and figures “fromincome tax under section 16, section 17, section18,”, of the words and figures “from income taxunder section 16, section 16A, section 16B, section16C, section 16D, section 17, section 17A, section18,”.

15. Section 33 of the principal enactment as lastamended by Act, No. 22 of 2011 is hereby further amendedin item (ii) of the further proviso to subsection (1) of thatsection, by the substitution for the words and figures “anypart of any allowance under section 34 from any employmentincome”, of the words and figures “any part of any allowanceunder section 34, other than the allowance referred to inparagraphs (u) and (v) of subsection (2) of section 34, fromany employment income”.



16. Section 34 of the principal enactment as lastamended by Act, No.18 of 2013 is hereby further amendedas follows:-


(a) by the substitution for paragraph (s) of thatsubsection, of the following paragraph:-

“(s) investment of not less than fifty millionrupees in the acquisition of fixedassets made by any person on or afterApril 1, 2011 but before April 1, 2014in the expansion of any undertakingwhich would have been qualified forexemption under section 16C or section17A had such undertaking commencedto carry on business on or after April 1,2011:

Provided however, where suchinvestment is made in any high techplant, machinery or equipment whichis acquired for energy efficiencypurposes or for technology upgradingpurposes or introducing any newtechnology or for power generationusing renewable energy resources in theexpansion of such undertaking on orafter April 1, 2011, but prior to April 1,2015 such investment shall comprise aqualifying payment.”;

(b) by the substitution in paragraph (u) of thatsubsection, for the words “whichever islower;”, of the words “whichever is lower;”;

(c) by the substitution in paragraph (v) of thatsubsection, for the words “not resident in SriLanka.”, of the words “not resident in SriLanka;”; and



(d) by the addition immediately after paragraph(v) of that subsection, of the following newparagraphs:-

“(w) any expenditure incurred notexceeding six hundred thousand rupeesfor any year of assessment commencingon or after April 1, 2014 on therepayment of the capital of a loanobtained from any bank licensed underthe Banking Act, No. 30 of 1988 or anyfinance company licensed under theFinance Business Act, No. 42 of 2011,of which the proceeds are utilized toconstruct a house or to purchase ahouse or a unit of a residentialapartment complex, by an individualwho is a professional and who furnishesa return under section 106, whethersuch individual obtained such loanalone or together with any otherindividual:

Provided that, if such loan isobtained together with anotherindividual or obtained for a co-ownedproperty, such deduction shall notexceed the amount of expenditureattributable to such individual whoobtained such loan.

For the purpose of this paragraph,“professional” shall have the samemeaning as given for that expressionin section 40C;

(x) any expenditure incurred by any bankor any finance company licensed underthe Finance Business Act, No.42 of2011, by way of cost of acquisition ormerger of any other bank or any other


finance company, where such cost isascertained by considering all the factson case by case basis in accordance withthe guidelines issued by the CentralBank of Sri Lanka for that purpose, andsuch expenditure is not deductibleunder section 25.”;


(a) by the substitution in sub-paragraph (i) ofparagraph (a) of that subsection, for the wordsand figures “ (t), (u) and (v) of subsection (2)”,of the words and figures “(t), (u), (v) and (w)of subsection (2)”; and

(b) by the substitution in sub-paragraph (i) ofparagraph (b) of that subsection, for the wordsand figures “(r), (s) and (t) of subsection (2)”,of the words and figures “(r), (s), (t) and (x) ofsubsection (2)”.

17. Section 40A of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedby the substitution for the words and figures “commencingon or after April 1, 2008,”, of the words and figures“commencing on or after April 1, 2008, but prior to April 1,2014,”.

18. The following new section is hereby insertedimmediately after section 40B of the principal enactmentand shall have effect as section 40C of that enactment :-

40C. (1) Where the taxable income of anyindividual, being a citizen of Sri Lanka, forany year of assessment commencing on or afterApril 1, 2014, includes any profits fromemployment (hereinafter in this section referredto as “relevant profits”) in the exercise of hisduties as a professional, and the rate of incometax payable on a part of such taxable income(hereinafter in this section referred to as the

Amendment ofsection 40A ofthe principalenactment.

Insertion of newsection 40C inthe principalenactment.

“Rates ofincome taxon the profitsfromemploymentofprofessionals.


“relevant part of the taxable income”) exceedssixteen per centum, then in regard to therelevant part of the taxable income, the taxpayable shall be computed as follows:-

(a) where such relevant part of the taxableincome exceeds the amount of therelevant profits:-

(i) the tax payable on such portionof the relevant part of the taxableincome as is equal to the amountof such relevant profits, shall becomputed at the rate of sixteenper centum; and

(ii) the tax payable on the balance ofthe relevant part of the taxableincome, shall be computedaccording to such of the ratesabove sixteen per centum, as areapplicable thereto, under the FirstSchedule to this Act; or

(b) where such relevant part of the taxableincome does not exceed the amount ofthe relevant profits, the tax payable onthe entirety of the relevant part of thetaxable income, shall be computed atthe rate of sixteen per centum.

(2) For the purpose of this section“professional” means a doctor registered underthe Medical Ordinance (Chapter 105), achartered engineer, a chartered architect, amember of the Institute of CharteredAccountants of Sri Lanka, a member of theAssociation of Chartered CertifiedAccountants, a member of the CharteredInstitute of Management Accountants (U.K.)and an attorney-at-law, and includes a softwareengineer, a pilot licensed under the AirNavigation Act (Chapter 365), a navigationofficer and a researcher or senior academic,recognized as an accredited professional.”.


19. Section 50 of the principal enactment is herebyamended by the substitution for the words and figures“taxable income of that person for any year of assessmentcommencing prior to April 1, 2014 includes”, of the words“taxable income of that person for any year of assessmentincludes”.

20. Section 51 of the principal enactment is herebyamended by the substitution for the words and figures“taxable income of that company for any year of assessmentcommencing prior to April 1, 2014 includes”, of the words“taxable income of that company for any year of assessmentincludes”.

21. Section 52 of the principal enactment is herebyamended by the substitution for the words and figures“taxable income of that company for any year of assessmentcommencing prior to April 1, 2015 includes”, of the words“taxable income of that company for any year of assessmentincludes”.

22. Section 56C of the principal enactment is herebyamended by the substitution for the words “from the sale ofany product manufactured in Sri Lanka”, of the words andfigures “from the sale of any product manufactured in SriLanka, other than such part of the profits and income exemptunder section 13,”.

23. Section 58 of the principal enactment is herebyrepealed and the following section is substituted therefor:-

58. Such part of the profits and incomewithin the meaning of paragraph (a) of section3, of any person as consists of profits andincome from the supply of any services, to anyexporter of goods or services or to any foreignprincipal of such exporter directly, beingservices which could be treated as essentiallyrelated to the manufacture of such goods orprovision of such services exported by suchexporter either directly or through any export

Amendment of

section 52 of the

principal

enactment.

Amendment ofsection 56C


Replacement ofsection 58 of theprincipalenactment.

“Rate of taxon profitsand incomefrom thesupply ofany servicesto anyexporter.




trading house, including any service providedby an agent of a ship operator to such agent'sforeign principal, and the payment for suchservices are made by such exporter or foreignprincipal to such person in Sri Lanka in foreigncurrency, shall, notwithstanding anything tothe contrary in any other provision of this Act,be chargeable with income tax at theappropriate rate specified in the Fifth Scheduleto this Act, if -

(a) such supply is covered by aninternational letter of credit or a letterof credit opened in a bank in Sri Lankaon a back to back basis against aninternational letter of credit for theremittance to Sri Lanka of the foreignexchange value of the exports relatedto such supply; or

(b) (i) the payment of the considerationfor such supply is made in foreigncurrency by means of a draft ortelegraphic transfer made in favourof such person by such exporter orforeign principal; and

(ii) such other documentary evidenceas is required by the Commissioner-General to satisfy himself that thegoods or services relating to suchsupply have in fact been exported,is adduced.”.

24. Section 59B of the principal enactment as lastamended by Act, No.18 of 2013 is hereby further amendedin subsection (1) of that section, by the substitution for thewords “any other provisions of this Act”, of the words “anyother provisions of this Act, but subject to provisions ofsection 59F ”.

Amendment ofsection 59B ofthe principalenactment.


25. Section 59D of the principal enactment is herebyamended in subsection (1) of that section, by the substitutionfor the words “holding of its shares by the general public.”,of the following words and figures:-

“holding of its shares by the general public:

Provided however, where any company lists itsshares in the aforesaid manner, on or before April 1,2017 and which is liable to pay income tax at the ratespecified in item 3 of PART-B of Second Schedule tothis Act, such rate shall be reduced by fifty per centumfor the year of assessment in which such shares arelisted and for another two years of assessmentimmediately succeeding that year of assessmentsubject such company after listing continues tomaintain not less than twenty per centum of holdingof its shares by the general public.”.

26. The following new sections are hereby insertedimmediately after section 59E of the principal enactmentand shall have effect as sections 59F, 59G and 59H

respectively, of that enactment:-

59F. (1) Where the taxable income of anyindividual being a citizen of Sri Lanka, for anyyear of assessment commencing on or afterApril 1, 2014, includes any profits and incomefrom providing professional services as aprofessional, such part of the taxable incomeshall, notwithstanding anything to the contraryin any other provisions of this Act, bechargeable with income tax at the appropriaterate specified in the Fifth Schedule to this Act.

(2) For the purpose of this section,“professional” shall have the same meaning asgiven for that expression in section 40C.

Insertion ofnew sections59F, 59G and59H in theprincipalenactment.

“Rate ofincome taxon the profitsand incomefrom theprovision ofprofessionalservices.

Amendment ofsection 59D ofthe principalenactment.


59G. (1) The tax rate applicable on theprofits and income earned by a bank for anyyear of assessment commencing on or afterApril 1, 2014, on any loan granted to anyindividual, who is a professional, for thepurpose of constructing a house or purchasinga house or a unit of a residential apartmentcomplex, by such individual alone or togetherwith any other individual, shall be reduced byfifty per centum.

(2) For the purpose of this section,“professional” shall have the same meaning asgiven for that expression in section 40C.

59H. Such part of the tax computed inaccordance with this Act, as being payable byany ship operator, ship builder or any agent ofa foreign ship shall, notwithstanding anythingto the contrary in any other provision of thisAct, be reduced by ten per centum, if such shipoperator, ship builder or agent providestraining on skill development in the shippingindustry to trainees.”.

27. Section 63 of the principal enactment as lastamended by Act, No. 10 of 2007 is hereby further amendedby the substitution for the words “such dividend shall,”, ofthe words “profits and income from such dividend shall,”.

28. Section 76 of the principal enactment is herebyamended in subsection (2) of that section, by the substitutionfor the words “the amount of any interest, annuity, groundrent or royalty”, of the words “the amount of any interest orannuity”.

29. Section 79 of the principal enactment as lastamended by Act, No.18 of 2013 is hereby further amendedby the repeal of subsection (3) of that section, and thesubstitution therefor, of the following subsection:-

Amendmentof section 63of theprincipalenactment.



Income tax

payable by

ship

operators,

ship builders

or any agent

of a foreign

ship.

Rate ofincome taxapplicable tothe profitsand incomeearned byany bank onloans grantedtoprofessionalsforconstructionpurposes.


“(3) For any year of assessment commencingprior to April 1, 2013, an individual who has beendeemed resident for two or more consecutive yearsof assessment shall be deemed to be resident untilsuch time as he is continuously absent from SriLanka for an unbroken period of three hundred andsixty five days. When such person is so absent, heshall notwithstanding the provisions of subsection(2), be deemed to be non-resident from thecommencement of the year of assessment in whichsuch absence commences.”.

30. Section 105 of the principal enactment is herebyamended in subsection (3) of that section, by the substitutionfor the words “provisions of this Act,”, of the words“provisions of this Act, and shall notwithstanding anythingto the contrary in any other provision of this Act, bechargeable with income tax at the appropriate rate specifiedin the Fifth Schedule to this Act,”.

31. Section 106 of the principal enactment as lastamended by Act, No. 22 of 2011 is hereby further amendedby the addition immediately after subsection (19) of thatsection, of the following new subsection:-

“(20) For the purposes of this Act, theCommissioner-General may give notice in writingto any person requiring him to furnish within theperiod specified in such notice, any information inrelation to any transaction between such person andany other person or class of persons.”.

32. Section 107 of the principal enactment as lastamended by Act, No.8 of 2012 is hereby further amended insubsection (3) of that section as follows:-

(a) by the substitution in paragraph (a) of thatsubsection, for the words “ “approved accountant”means –”, of the words “ “approved accountant”for any year of assessment commencing prior toApril 1, 2014 means -”;

Amendment ofsection 106 ofthe principalenactment.


Amendmentof section105 of theprincipalenactment.


(b) by the insertion immediately after paragraph (a) ofthat subsection, of the following new paragraph:-

“(aa) “approved accountant” for any year ofassessment commencing on or after April1, 2014 means an accountant who is amember of the Institute of CharteredAccountant of Sri Lanka;”; and

(c) by the substitution in paragraph (b) of thatsubsection, for the words “commercial practices andaccounting standards;”, of the words “commercialpractices and accounting standards and theoperational profits calculated in accordance withthe Sri Lanka Financial Reporting Standards;”.

33. Section 117 of the principal enactment as lastamended by Act, No. 22 of 2011 is hereby further amendedin subsection (1) of that section, by the substitution for thewords “provides a benefit in cash or in kind to any otherperson who”, of the words “to any other person and wheresuch director, chairperson or other person”.

34. Section 117A of the principal enactment is herebyamended as follows :-

(1) by the substitution in subsection (1) of that section,for all the words and figures from “shall deduct taxat the rate of –” to the end of that subsection, of thefollowing words and figures:-

“shall deduct tax at the rate of –

(a) ten per centum -

(i) where the aggregate of suchpayments or value of such benefitsdoes not exceed twenty fivethousand rupees per month; or


Amendmentof section 117A



(ii) where the aggregate of suchpayments or value of such benefitsdoes not exceed fifty thousandrupees per month, if such employeeis an individual employed in thepublic sector; or

(b) sixteen per centum–

(i) where the aggregate of suchpayments or value of such benefitsexceeds twenty five thousand rupeesper month; or

(ii) where the aggregate of suchpayments or value of such benefitsexceeds fifty thousand rupees permonth, if such employee is anindividual employed in the publicsector;

on such payments or the value of such benefitsin terms of the provisions of this Chapter. Nodirection shall be issued or entertained undersection 118 in relation to such payments orvalue of such benefits.”; and

(2) by the addition immediately after subsection (3) ofthat section, of the following new subsection:-

“(4) Where an individual is employed undermore than one employer or has more thanone employment and receiving anybenefit from the private use of a motorvehicle or any allowance paid in lieu ofthe provision of such vehicle or value ofany transport facility from more than oneemployer or from more than oneemployment, the excess of aggregate ofsuch benefit or allowance or such valueover fifty thousand rupees shall form partof such employee’s employment incomeliable to tax.”.


35. Section 133 of the principal enactment as lastamended by Act, No 22 of 2011 is hereby further amendedin subsection (3) of that section as follows :-

(1) by the substitution in paragraph (b) of thatsubsection, for the words ''under this Act ; or", ofthe words ''under this Act ;";

(2) by the substitution in paragraph (c) of thatsubsection, for the words and figure ''section 95 .";of the words and figure ''section 95 ; or"; and

(3) by the addition, immediately after paragraph (c) ofthat subsection, of the following new paragraph :-

“(d) which is paid on the deposits made by anyparticipating institution under the standingdeposit facility with the Central Bank of SriLanka.”.

36. Section 134 of the principal enactment as lastamended by Act, No. 10 of 2007 is hereby further amendedby the addition at the end of subsection (2) of that section,of the following new subsection :-

“(3) The deduction referred to in subsection (1)shall not apply to any interest which is exempt fromincome tax under this Act.”.

37. Section 135 of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedby the substitution in paragraph (c) of subsection (1) of thatsection, for the words and figures “any interest or discountreferred to in paragraph (o) of section 9.”, of the words andfigures “any interest or discount referred to in paragraph(aa) or paragraph (o) of section 9.”.





38. Section 137 of the principal enactment as lastamended by Act, No.10 of 2007, is hereby further amendedby the insertion immediately after subsection (2) of thatsection, of the following new subsection:-

“(3) For the avoidance of doubt, interest incomereferred to in subsection (1) in relation to any bank orfinancial institution means the profits and incomeearned or accrued from any Security, Bond or Bill.”.

39. Section 163 of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedin subsection (5) of that section, by the substitution in theproviso to that subsection, for the words “in respect of anyyear of assessment, consequent to the receipt by such personof any arrears relating to the profits from employment of thatperson for that year of assessment:”, of the following words:-

“in respect of any year of assessment consequent to –

(i) the receipt by such person of any arrearsrelating to the profits from employment ofthat person for that year of assessment; or

(ii) any adjustment made in line with theadoption of the Sri Lanka FinancialReporting Standards for the year ofassessment in which such adoption wasmade:”.

40. Section 176 of the principal enactment is herebyamended in subsection (2) of that section, by the substitutionfor the words “chargeable for one complete year ofassessment”, of the words “chargeable for five complete yearsof assessment”.

41. Section 195 of the principal enactment is herebyamended by the addition immediately after subsection (2)of that section, of the following new subsection:-






“(3) Without prejudice to the generality ofsubsection (1) and subsection (2), no notice,assessment, certificate, or other proceeding purportingto be in accordance with the provisions of this Actshall be quashed, or deemed to be void or voidable orbe affected by reason of any variance in thedesignation of the officer who signed or executed suchnotice, assessment, certificate or other proceeding asthe case may be, due to the implementation of theMinutes of the Sri Lanka Inland Revenue Service aspublished in the Gazette, if the same is in substanceand effect in conformity with, or according to, theintent and meaning of this Act or any other Actadministered by the Commissioner-General, and if theperson assessed or intended to be assessed or affectedthereby, is designated therein according to commonintent and understanding.”.

42. Section 209 of the principal enactment is herebyamended as follows:-

(1) by the substitution in subsection (1) of that section,for the words “his authorized representative or tothe Minister or the Secretary”, of the words “hisauthorized representative or to the Minister or theSecretary”;

(2) by the addition immediately after paragraph (d) ofsubsection (5) of that section, of the following newparagraphs:-

“(e) if required by a letter in writing by theDirector General of Customs, in the courseof carrying out the official duties, furnish asspecified in such letter, all informationavailable to him relating to the affairs of anyperson in respect of whom an investigationis being conducted by the Director Generalof Customs, or of the spouse or a son ordaughter of such person, which is in thepossession or under the control of theCommissioner-General;



(f) if required by a letter in writing by theDirector General of Census and Statistics, inthe course of carrying out the official duties,furnish as specified in such letter, allinformation available to him relating to theaffairs of any person in respect of whominformation and statistics are being collectedby the Director General of Census andStatistics, or of the spouse or a son or daughterof such person, which is in the possession orunder the control of the Commissioner-General;

(g) if required in pursuance to an Order issued bya competent Court, by the Inspector Generalof Police, in the course of an investigation ofany crime or proceeds of crime which affectsto the public interest, against any person, orafter the commencement of prosecution of anyperson for bribery or corruption, furnish, allinformation available to him relating to theaffairs of such person or of the spouse or a sonor daughter of such person, as specified insuch order, and provide a certified copy ofany document relating to such person, spouse,son or daughter, which is in the possession orunder the control of the Commissioner-General.”; and

(3) by the substitution in subsection (12) of thatsection, for the words “Minister or the Secretary” ofthe words “Minister or the Secretary”.

43. Section 212 of the principal enactment is herebyamended in subsection (2) of that section as follows:-

(1) by the substitution in paragraph (d) of thatsubsection, for the words “five hundred rupees.”, ofthe words “five hundred rupees;”; and



(2) by the addition immediately after paragraph (d) ofthat subsection, of the following new paragraph:-

“(e) the manner of computation of profits andincome whenever the Financial AccountingStandards applicable in Sri Lanka arechanged.”.

44. Section 217 of the principal enactment as lastamended by Act, No. 18 of 2013 is hereby further amendedas follows:-

(1) in the definition of the expression “authorizedrepresentative” by the repeal of item (ii) of sub-paragraph (a) of paragraph (1); and

(2) in the definition of the expression “executiveofficer”, by the substitution for the words “not lessthan twenty thousand rupees;”, of the words “ notless than seventy five thousand rupees;”.

45. The Second Schedule to the principal enactment aslast amended by Act, No. 18 of 2013 is hereby furtheramended in PART- B of that Schedule as follows:-

(1) in item 1 of that PART –

(a) by the substitution in paragraph (c) of thatitem, for all the words and figures from “Anycompany-” to the end of that item, of thefollowing words and figures:-

“Any company other than any companyengaged in the manufacture of any articleor in the provision of any service -

(A) (i) of which the taxableincome does not exceedRs. 5,000,000/-;

(ii) which is not a companyreferred to in PART-A;and


Amendmentof the SecondSchedule to theprincipalenactment.


(B) which is not the holdingcompany, a subsidiarycompany, or an associatecompany of a group ofcompanies,

on the taxable income

(b) by the insertion immediately after paragraph (c) ofthat item, of the following new paragraph:-

“ (d) For any year of assessment commencing onor after April 1, 2011, but prior to April 1,2014 –

any company engaged in themanufacture of any article or in theprovision of any service-

(A) (i) of which the taxableincome does not exceedRs. 5,000,000/-;

(ii) which is not a companyreferred to in PART-A;and

(B) which is not the holdingcompany, a subsidiarycompany, or an associatecompany of a group ofcompanies,

on the taxable income

For the purpose of item (B) ofparagraph (b), paragraph (c) andparagraph (d), the expressions“holding company”, “subsidiarycompany”, and “group of companies”shall have the same respectivemeanings which they have in theCompanies Act, No.7 of 2007 andincluds a holding company or asubsidiary of any companyincorporated or registered outside SriLanka.”;

12 percentum;

12 percentum;”;


(2) by the substitution for item 2 of that PART, of thefollowing item:-

“2 Any company for the year of assessment beingany year of assessment commencing prior toApril 1, 2011 in which its shares are firstquoted in any official list published by astock exchange licensed by the Securities andExchange Commission of Sri Lanka(hereinafter referred to as the “first year ofassessment”) and for each year of assessmentwithin the period of four years immediatelysucceeding that first year of assessment,

(a) for which the taxable income exceedsRs. 5,000,000/-; or

(b) if such company is a holding company,a subsidiary company or an associatecompany of a group of companies,

on the taxable income for that year ofassessment—

(i) for any yearof assessmentcommencing prior toApril 1, 2011

(ii) for any yearof assessmentcommencing on orafter April 1, 2011

Provided that, where such first year ofassessment is any year of assessment whichcommences prior to April 1, 2006, the rate of33 1/3 per centum shall apply in relation toany year of assessment which falls withinsuch period of four years, but whichcommences on or after April 1, 2006.”.

33 1/3 percentum

28 percentum


46. The Fifth Schedule to the principal enactment aslast amended by the Act, No.18 of 2013 is hereby furtheramended as follows :-

(1) by the substitution for item 22 of that Schedule, ofthe following item:-

“22 The rate of income tax on profits and incomereferred to in section 58-

(a) for any year of assessmentcommencing prior to April1, 2011

(b) for any year of assessmentcommencing on or afterApril 1, 2011, but prior toApril 1, 2014

(c) for any year of assessmentcommencing on or afterApril 1, 2014


“33 The rate of income tax applicable to profitsand income of any person from anyundertaking referred to in section 59B-

Amendmentof the FifthSchedule to theprincipalenactment.

15 percentum

12 percentum

As per theFirstSchedule, butsubject to amaximum of12 percentum foranindividual,and 12 percentum for acompany”;


As per theFirstSchedule,but subjectto amaximum of10 percentum foranindividual,and 10 percentum for acompany

As per theFirstSchedule butsubject to amaximum of12 percentum foranindividual,and 12 percentum for acompany”;

12 percentum ”;

(a) for any year of assessmentcommencing prior to April1, 2014

(b) for any year of assessmentcommencing on or afterApril 1, 2014


“42 The rate of income tax applicableto such part of the profits andincome of any person from anyundertaking referred to in section56A-

(4) by the addition immediately after item 45 of thatSchedule, of the following new item:-

“46 The rate of income tax applicableto such part of the profits and


income of any individual, from aprofession as referred to in section59F-

on the first Rs. 500,000/-of the taxable income

on the next Rs. 500,000/-of the taxable income

on the next Rs. 24,000,000/-of the taxable income

on the next Rs. 10,000,000/-of the taxable income

on the balance of the taxableincome

47. The amount of tax charged or collected from anyperson by or on behalf of the Comissioner-General, by virtueof the application of any provision of this Act, during theperiod commencing on April 1, 2014 and ending on thedate on which the certificate of the Speaker is endorsed inrespect of this Act, shall be deemed to have been validly andlawfully charged or collected under this Act by theCommissioner-General or by such person who charged orcollected such tax on behalf of the Commissioner-General :

Provided that, the aforesaid provision shall not affectany decision or order made by any Court or any proceedingspending in any Court in respect of any tax charged orcollected during such period.

48. In the event of any inconsistency between theSinhala and Tamil texts of this Act, the Sinhala text shallprevail.

4 per centum

8 per centum

12 per centum

Sinhala text toprevail in caseof aninconsistency.

16 per centum.".

14 per centum

''Validation.


Annual subscription of English Bills and Acts of the Parliament Rs. 885 (Local), Rs. 1,180(Foreign), Payable to the SUPERINTENDENT, GOVERNMENT PUBLICATIONS BUREAU, DEPARTMENT OF

GOVERNMENT INFORMATION, NO. 163, KIRULAPONA MAWATHA, POLHENGODA, COLOMBO 05 before 15thDecember each year in respect of the year following.

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