PARLIAMENT OF THE DEMOCRATIC SOCIALIST … Tax_Documents/IR_Act_No._9...PARLIAMENT OF THE DEMOCRATIC...

PARLIAMENT OF THE DEMOCRATICSOCIALIST REPUBLIC OF

SRI LANKA

INLAND REVENUE (AMENDMENT) ACT, No. 9 OF 2015

Printed on the Order of Government

[Certified on 30th October, 2015]

PRINTED AT THE DEPARTMENT OF GOVERNMENT PRINTING, SRI LANKA

TO BE PURCHASED AT THE GOVERNMENT PUBLICATIONS BUREAU, COLOMBO 5

Price : Rs. 42.00 Postage : Rs. 50.00

Published as a Supplement to Part II of the Gazette of the DemocraticSocialist Republic of Sri Lanka of October 30, 2015

Inland Revenue (Amendment)Act, No. 9 of 2015

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2—PL 009232—2,950 (09/2015)

[Certified on 30th October, 2015]

L.D.—O. 11/2015

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. 9 of 2015, and shall be deemed for allpurposes to have come into operation on April 1, 2015 unlessstated otherwise.

2. Section 7 of the Inland Revenue Act, No. 10 of 2006(hereinafter referred to as the “principal enactment”) as lastamended by Act, No.8 of 2014 is hereby further amended inparagraph (b) of that section as follows:-

(1) by the substitution in sub-paragraph (xvii) of thatparagraph for the words and figures “on or beforeMarch 31, 2008 or for any year of assessmentcommencing on or after April 1, 2013, arising out ofbusiness”, of the words and figures “on or beforeMarch 31, 2008, arising out of business”;

(2) by the substitution in sub-paragraph (lxxii) of thatparagraph for the words and figures “Act, No. 12 of1986; and”, of the words and figures “Act, No. 12 of1986;”;

(3) by the substitution in sub-paragraph (lxxiii) of thatparagraph for the words and figures “TrustOrdinance (Chapter 87).”, of the words and figures“Trust Ordinance (Chapter 87); and” ; and

Short title andthe date ofoperation.

Amendment ofsection 7 of theInland RevenueAct, No. 10 of2006.

2 Inland Revenue (Amendment)Act, No. 9 of 2015

(4) by the addition immediately after sub-paragraph(lxxiii) of that paragraph, of the following new sub-paragraph:-

“(Ixxiv) the Diabetes Association of Sri Lankaincorporated by the Diabetes Association ofSri Lanka (Incorporation) Act, No. 1 of 1992.” .

3. Section 8 of the principal enactment as last amendedby Act, No. 8 of 2014 is hereby further amended in subsection(1) of that section as follows:-

(1) by the substitution in paragraph (x) of thatsubsection for the words “for that year ofassessment.”, of the words “for that year ofassessment; and”; and

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

“(y) benefit from provision of any loan by theemployer free of interest or at a subsidisedrate of interest, if such loan is provided notout of funds borrowed for that purpose. ” .

4. Section 9 of the principal enactment as last amendedby Act, No. 8 of 2014 is hereby further amended as follows:–

(1) by the substitution in sub-paragraph (ii) of paragraph(h) of that section, for the words and figures“commencing on or after April 1, 2011, to anyindividual”, of the words and figures “ commencingon or after April 1, 2011, but prior to January 1, 2015,to any individual”;

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

“(hh) such part of any interest accruing for, orarising in, for the period commencing onJanuary 1, 2015 and ending on March 31,

Amendment ofsection 9 of theprincipalenactment.

Amendment ofsection 8 of theprincipalenactment.


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2015, or for any year of assessmentcommencing on or after April 1, 2015 to anyindividual who is a citizen of Sri Lanka andresident in Sri Lanka and who is sixty yearsor more or reaching sixty years during theperiod commencing from January 1, 2015and ending on March 31, 2015 or who ismore than fifty nine years old on the firstday of the year of assessment commencingon or after April 1, 2015, from any depositmaintained in any bank or financialinstitution authorized by the Central Bankof Sri Lanka to accept deposits from thegeneral public or any registered societywithin the meaning of the Co-operativeSocieties Law, No. 5 of 1972;

(hhh) such part of any interest accruing for, orarising in, any year of assessmentcommencing on or after April 1, 2015, toany individual or charitable institutionwhere such individual or charitableinstitution maintains one savings accountor more than one savings account, wherethe interest paid for a month is less thanfive thousand rupees.

For the purpose of this paragraph,“savings account” means an account,whether or not subject to any conditionaffecting the right to withdraw moneytherefrom and which bears interest at a ratenot dependent on the period for which thedeposit is maintained;”; and

(3) by the addition immediately after paragraph (o) ofthat section , of the following new paragraphs:-

“(p) the interest or discount accruing or arisingto any person from any investment made


on or after January 1, 2015 in anyCorporate Debt Security, issued by theUrban Development Authorityestablished by the Urban DevelopmentAuthority Law, No. 41 of 1978; and

(q) the interest accruing or arising to anyindividual who is Sri Lankan, living oremployed abroad from any investmentmade on or after January 1, 2015 in NationDevelopment Bonds issued by the CentralBank of Sri Lanka on behalf of theGovernment.”.


(1) by the substitution in paragraph (l) of thatsubsection for the words “the second mentioneddividend by that company.”, of the words “thesecond mentioned dividend by that company;” and

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

“(m) any dividend paid to a shareholder of anynew undertaking commenced on or afterApril 1, 2015 for manufacture of productsfor export, and which is not formed bysplitting-up or re-construction of anexisting undertaking with an investmentof not less than two million US Dollars(or equivalent in any other currency) andfor which depreciation allowances areentitled to under paragraph (h) of the firstproviso to paragraph (a) of subsection(1) of section 25, where such dividends

Amendment ofsection 10 ofthe principalenactment.


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are paid out of such profits and incomeof such new undertaking during theperiod reckoned from the year ofassessment in which such newundertaking commences to carry oncommercial operations and another fouryears of assessment immediatelysucceeding that year of assessment.”.

6. Section 13 of the principal enactment as last amendedby Act, No. 8 of 2014 is hereby further amended as follows:-

(1) by the insertion immediately after paragraph ( qqqq)of that section, of the following new paragraph:–

“(qqqqq) one half of the profits and income forany period on or after April 1, 2015from the production of films or dramasof any individual who produces anaward winning cinema or a drama at aninternational film or drama festival, fora period of five years of assessmentcommencing from the year in whichsuch award is received;” ;

(2) by the insertion immediately after paragraph ( tt) ofthat section, of the following new paragraph:–

“ (ttt) the profits and income arising oraccruing to any Unit Trust frominvestments made on or after January1, 2015 in US Dollar deposits or USDollar denominated securities listed inany foreign stock exchange;”; and

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

“(yyyyyyyyy) the profits and income arising oraccruing to any company,partnership or body of persons



outside Sri Lanka for any year ofassessment commencing on orafter April 1, 2015, from anypayment made by way of royaltyas a specific requirement of anyinformation technology orbusiness process outsourcingcompany in Sri Lanka, for the yearof assessment in which suchcompany in Sri Lanka commencessuch operations and for anotheryear of assessment immediatelysucceeding that year ofassessment;”.

7. Section 25 of the principal enactment as last amendedby Act, No. 8 of 2014 is hereby further amended as follows:–

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

(a) by the repeal of sub-paragraph (v) and sub-paragraph (vi) of paragraph (a) of thatsubsection, and the substitution therefor,of the following sub- paragraph:–

“(v) any qualified building constructedor any unit of a condominiumproperty acquired and which isapproved by the UrbanDevelopment Authorityestablished by the UrbanDevelopment Authority Law,No. 41 of 1978 and constructed tobe used as a commercial unit or anyhotel building (including a hotel



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building complex) or any industrialbuilding (including any industrialbuilding complex) acquired from aperson who had used such buildingin any trade or business-

(A) prior to April 1, 2015 at therate of six and two third percentum per annum, on thecost of construction or costof acquisition of suchbuilding or unit; or

(B) on or after April 1, 2015 atthe rate of ten per centumper annum on the cost ofconstruction or the cost ofacquisition of such buildingor unit;”;

(b) by the addition immediately after paragraph(g) of the proviso to paragraph (a) of thatsubsection, of the following newparagraph:–

“(h) where any plant, machinery orequipment acquired and used onor after April 1, 2015, in any newundertaking commenced on orafter April 1, 2015 for themanufacture of products forexports with an investment of notless than two million US Dollarsor its equivalent in other currencyand which is not formed bysplitting up or re-construction ofan existing undertaking, the rateof depreciation shall be hundredper centum of the cost ofacquisition;”;


(c) in the second proviso to paragraph (a) ofthat subsection, by the substitution for thewords and figures “referred to in sub-paragraphs (i), (ii), (iii), or (iv)”, of the wordsand figures “referred to in sub-paragraph(i), (ii), (iii), (iv) or (v)”;

(d) in the proviso to paragraph (i) of thatsubsection, by the insertion immediatelyafter paragraph (B) of that proviso, of thefollowing new paragraph:–

“(C) where such expenditure onresearch is incurred on or afterApril 1, 2015 , for any innovationor research relating to high valueagricultural products and suchresearch is carried out by suchperson himself or through anyresearch institution, in Sri Lanka”;

(e) by the insertion immediately afterparagraph (i) of that subsection, of thefollowing paragraph:–

“For the purpose of this paragraph theCommissioner-General shall issueguidelines in order to ensure the uniformapplication of deduction;”;

(f) by the substitution in sub-paragraph (iv)to the proviso to paragraph (k) of thatsubsection for the words and figures“under Chapter XIV or in the opinion”, ofthe words and figures “under Chapter XIVof this Act where such benefit is not exemptunder paragraph (s) of subsection (1) ofsection 8 of this Act, or in the opinion”;


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(g) by the repeal of paragraph (w) of thatsubsection and the substitution therefor,of the following new paragraphs:-

“(w) for any year of assessmentcommencing on or after April 1, 2014any royalty or ground rent payablefor the relevant year of assessmentand paid by such person if suchamount was not allowed to bededucted prior to April 1, 2014,under paragraph (a) of subsection(5) of section 32;

(x) for any year of assessmentcommencing on or after April 1,2015, an amount equal to threehundred per centum of theexpenditure incurred by any personregistered with the Tertiary andVocational Education Commissionestablished under the Tertiary andVocational Educational Act, No. 20of 1990 on standard skilldevelopment training by anyinstitution recommended by suchCommission to be provided totrainees;

(y) for any year of assessmentcommencing on or after April 1,2015, an amount equal to threehundred per centum of theexpenditure incurred by any personfor brand promotion for the exportof products manufactured by suchpersons.

For the purpose of this paragraph“brand promotion” means, creatingan internationally recognized brandname for a local value addedproduct or produce.”;


(2) in subsection (5) of that section, by the insertion atthe end of the proviso to that subsection, of thefollowing new paragraph :-

“For the purpose of this subsection “person”includes a partnership.”;

(3) in subsection (7) of that section-

(a) by the substitution for the words in thedefinition of “capital assets” in paragraph(b) of that subsection for the words “means any plant, machinery, fixture,fitting, utensils, articles or equipment”,of the words “means any plant,machinery, fixture, fitting, utensils, articlesor equipment, including computersoftware or intangible assets other thangoodwill,”;

(b) by the repeal of sub-paragraph (iii) ofparagraph (f) of that subsection, and thesubstitution therefor, of the followingnew sub-paragraph:-

“(iii) where a company is incorporated(hereinafter referred to as the “firstmentioned company”) to -

(a) take over the business(including the capitalassets) carried on by anindividual either solely orin partnership with others,and acquires the capitalassets of such businessbeing carried on by suchindividual or partnership;or


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(b) segregate the business oflong term insurance andgeneral insurance asseparate businesses asrequired in terms ofRegulation of InsuranceIndustry (Amendment)Act, No. 3 of 2011 or toconsolidate, acquire ormerge of any bank,financial institution orleasing company underthe guidance of theCentral Bank of Sri Lankasubject to conditionsspecified in the Guidelinesissued by theCommissioner Generalwhere such businessesare carried out separatelyprior to such segregation,consolidation, acquisitionor merger, by each suchcompany (hereinafterreferred to as the “secondmentioned company”),

the cost of acquisition of eachcapital asset by the firstmentioned company shall bedeemed to be the cost ofacquisition of such capital assetby such individual orpartnership or the secondmentioned company, reducedby the amount of any allowancefor depreciation granted inrespect of such asset to such


individual or partnership orsecond mentioned company,and the date of acquisition ofsuch capital assets by the firstmentioned company, shall bedeemed to be the date ofacquisition of such capital assetby such individual, partnershipor second mentionedcompany;”.


(1) in paragraph (l) of that subsection:-

(a) by the substitution for the words andfigures in sub-paragraph (v) of thatparagraph “the Value Added Tax Act,No. 14 of 2002; or” of the words and figures“the Value Added Tax Act, No. 14 of 2002and any Nation Building Tax on FinancialServices within the provisions of the NationBuilding Tax Act, No. 9 of 2009; or”;

(b) by the substitution in sub-paragraph (vii)of that paragraph for the words and figures“Act, No. 12 of 2013;”, of the words andfigures “ Act, No. 12 of 2013; or”; and

(c) by the insertion immediately after sub-paragraph (vii) of that paragraph, of thefollowing new sub-paragraph:-

“(viii) Super Gain Tax, Bars and TavernsLevy, Casino Industry Levy, MobileTelephone Operator Levy, Satellite



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Location Levy, Dedicated SportsChannel Levy and Mansion Taximposed and levied under theprovisions of the Finance Act,No. 10 of 2015,”; and

(2) by the repeal of paragraph (m) of that subsectionand substitution therefor, of the following newparagraph:-

“(m) any ground rent or royalty payable for anyperiod prior to April 1, 2014 and paid afterApril 1, 2014 which is deductible underparagraph (a) of subsection (5) of section32 or annuity paid by such person;”.


(1) in paragraph (a) of that subsection, by thesubstitution for all the words and figures from “sumspaid by such person” to the words and figures“subsection (1) of section 26:”, of the followingwords and figures:-

“sums paid by such person for any year ofassessment by way of:

(i) any ground rent or royalty payable forany period prior to April 1, 2014 and whichis paid after April 1, 2014; or

(ii) annuity or interest,

which he is not entitled to deduct undersection 25.

For the purpose of this paragraph interestdoes not include the excess referred to inparagraph (x) or paragraph (y) of subsection(1) of section 26:”; and



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

“(dd) the balance , if any, of any loss deductibleunder the provisions of this Act , of anybusiness of any bank, financial institutionor leasing company which is consolidated,acquired or merged in terms of theguidelines issued by the Central Bank ofSri Lanka subject to conditions specifiedin the guidelines issued by theCommissioner General, shall continue to bededucted, if it would have been claimedunder this section prior to suchconsolidation, acquisition or merger,notwithstanding anything to the contraryin any other provision of this Act, butsubject to the provisions of paragraph (b),from the total statutory income of therespective bank, financial institution orleasing company as a result of suchconsolidation, acquisition or merger;”.

10. Section 34 of the principal enactment as lastamended by Act, No. 8 of 2014 is hereby further amended asfollows:-

(1) in subsection (2) of that section: -

(a) in paragraph (b) of that subsection, bythe addition immediately after sub-paragraph (ix), of the following new sub-paragraph:-

“(x) National Kidney Fund establishedunder the National KidneyFoundation of Sri Lanka(Incorporation) Act, No. 34 of 2006;”;



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(b) in the paragraph (s) of that subsection, bythe substitution for all the words andfigures from “investment of not less than”to the words and figures “business on orafter April 1, 2011:”, of the words andfigures “investment of not less than fiftymillion rupees in the acquisition of fixedassets made by any person on or afterApril 1, 2011 but before April 1, 2014 in theexpansion of any undertaking which wouldhave been qualified for exemption undersection 16C or section 17A had suchundertaking commenced to carry onbusiness on or after April 1, 2011:”;

(c) in paragraph (u) of that subsection, by thesubstitution for all the words and figuresfrom “ after April 1, 2013, then-” to the words“whichever is lower;”, of the followingwords and figures:-

“after April 1, 2013, then-

(i) such part of profits in excess offive hundred thousand rupees ;or

(ii) for any year of assessment endedprior to April 1, 2015, one hundredthousand rupees and for any yearof assessment commencing on orafter April 1, 2015, two hundredand fifty thousand rupees,

whichever is lower;”;


(d) by the substitution for paragraph (v) ofthat subsection, of the following newparagraph:-

“(v) such part of official emolumentsarising in Sri Lanka to anyindividual who is not a citizen ofSri Lanka and not resident in SriLanka–

(i) for any year ofassessment commencingon or after April 1, 2013,but prior to April 1, 2015does not exceed onehundred thousandrupees; or

(ii) for any year ofassessment commencingon or after April 1, 2015does not exceed twohundred and fiftythousand rupees;”;

(e) by the repeal of paragraph (x) of thatsubsection and the substitution therefor,of the following new paragraph:-

“(x) any expenditure incurred by anybank, any financial institution orany leasing company, by way ofcost of acquisition or merger ofany other bank, any otherfinancial institution or any otherleasing company, where such costis ascertained by considering allthe facts on case by case basis inaccordance with the guidelines


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issued by the Central Bank of SriLanka, in the manner specified bythe Commissioner General for thatpurpose.”; and

(2) in subsection (4) of that section by the insertionimmediately after sub-paragraph (ix) of paragraph(b) of that subsection, of the following new sub-paragraph:-

“(x) in respect of any qualifying paymentreferred to in paragraph (x) of subsection(2), on the expenditure incurred by any bankor other company referred to in thatparagraph in any year of assessment shallnot exceed one third of the assessableincome or three hundred million rupeeswhichever is higher. The balance, if any,not deductible in the same year ofassessment shall be carried forward andbe deductible from the assessable incomeof such bank or other company for the nextsucceeding year of assessment and so onsubject to the same conditions.”.

11. Section 39 of the principal enactment is herebyamended by the substitution for the words “The gross royaltypayable”, of the words “ The gross royalty (not being royaltyexempt under any other provision of this Act) payable”.

12. Section 40B of the principal enactment as lastamended by Act, No.18 of 2013 is hereby further amended bythe substitution for the words and figures “commencing onor after April 1, 2009, of any”, of the words and figures“commencing on or after April 1, 2009 but prior to April 1,2015, of any”.


Amendment ofsection 40B ofthe principalenactment.


13. Section 40C of the principal enactment is herebyamended in subsection (1) of that section, by the substitutionfor all the words and figures from “Where the taxable income”to the words “and the rate of income tax”, of the followingwords and figures:-

“Where the taxable income of any individual:

(i) being a citizen of Sri Lanka, for any year ofassessment commencing on or after April 1,2014 but prior to April 1, 2015, includes anyprofits from employment in the exercise of hisduties as a professional; or

(ii) includes any profits from employment for anyyear of assessment commencing on or afterApril 1, 2015,

(hereinafter in this section referred to as “relevantprofits”) and the rate of income tax”.

14. Section 45 of the principal enactment as last amendedby Act, No. 8 of 2012, is hereby further amended as follows:-

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

(a) in paragraph (b) of that subsection , for thewords “tourism; or”, of the words“tourism;”;

(b) in paragraph (c) of that subsection , for thewords “construction work;” of the words,“construction work; or”; and

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

“(d) undertaking for the manufacture ofsugar;”; and


Amendment ofsection 40C ofthe principalenactment.


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(2) in subsection (2) of that section, by the additionimmediately after paragraph (d) of that subsection,of the following new paragraph:-

“(e) undertaking for the manufacture of sugar”means an undertaking carried on for locallymanufacturing sugar by using sugar caneor beet or any other produce exclusivelycultivated locally.”.

15. Section 46 of the principal enactment as last amendedby Act, No. 22 of 2011 is hereby further amended asfollows:-

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

(a) in paragraph (b) of that subsection , for thewords “tourism; or”, of the words“tourism;”;

(b) in paragraph (c) of that subsection , for thewords “construction work;”, of the words“construction work; or”; and

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

“(d) undertaking for the manufacture ofsugar,”; and

(2) in subsection (2) of that section by the substitutionfor the words “profits and income from anyagricultural undertaking” and “undertaking forconstruction work” shall”, of the words “profitsand income from any agricultural undertaking” ,“undertaking for construction work” and“undertaking for the manufacture of sugar”, shall”.



16. The following new section is hereby insertedimmediately after section 48C of the principal enactment andshall have effect as section 48D of that enactment:-

48D. Notwithstanding the period specifiedin section 16D or paragraph (b) and (c) ofsubsection (2) of section 17A to completeinvestment and to commence the commercialoperations by any new undertaking which hasbeen approved by the Board of Investment ofSri Lanka by entering into an agreement undersection 17 of the Board of Investment of SriLanka Law, No. 4 of 1978 which provides taxholiday under section 16D or section 17A ofthis Act, if the approval of the Board ofInvestment was granted prior to October 31,2014 and the company which invested in suchundertaking is unable to complete the requiredinvestment prior to April 1, 2015 and tocommence commercial operations prior to April1, 2016 due to any practical reasons dependingon the nature of the business, such period shallbe extended up to April 1, 2018, if theCommissioner-General is satisfied that thenature of the activities engaged in by suchnew undertaking are only activities qualifiedunder section 16D or section 17A and the Boardof Investment of Sri Lanka confirms , on requestmade by the investor, that the reasons for suchextension is justifiable and acceptable byexamining the status of the progress of suchnew undertaking.”.

17. Section 56D of the principal enactment is herebyamended as follows:-

(1) by the substitution in that section for the words“locally manufactured garments, bags made out offabric, linen, curtains or any other goods,”, of the

Insertion of newsection 48D ofthe principalenactment.

“Extensionof the periodspecified forthefulfilment ofinvestmentcriteria byany companyentered intoan agreementwith theBoard ofInvestmentof Sri Lankaunder section16D orsection 17A.

Amendment ofsection 56D ofthe principalenactment.


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words “locally manufactured garments, bags madeout of fabric, linen, curtains, packing items or ceramicproducts,”; and

(2) by the substitution in the proviso of that section forthe words “the local value addition of suchgarments, bags, linen, curtains or other goods,”, ofthe words “the local value addition of suchgarments, bags, linen, curtains, packing items orceramic products,”.

18. Section 58 of the principal enactment as last amendedby Act, No. 8 of 2014, is hereby further amended as follows:-

(1) by the substitution in that section for all the wordsfrom “supply of any services, to any” to the words“foreign principal to such person in Sri Lanka”, ofthe following words and figures:-

“supply of-

(i) any services to any exporter of goodsor services or to any foreign principalof such exporter directly, being serviceswhich could be treated as essentiallyrelated to the manufacture of suchgoods or provisions of such servicesexported by such exporter either directlyor through any export trading house;

(ii) any services provided by an agent of aship operator to such agent’s foreignprincipal; or

(iii) any services provided by any freightforwarder insofar as such services arefor export of goods,



and the payment for such services are madeby such exporter, foreign principal or therecipient of the services of the freightforwarder, to such person in Sri Lanka”; and

(2) by the addition immediately after that section, of thefollowing new paragraph:-

“For the purpose of this section “freightforwarder” means a person or a partnership who orwhich is registered with the Central Bank ofSri Lanka under the Exchange Control Act, as aFreight forwarder and who-

(i) issues multi-modal documents of carriagecovered by a Freight Forwarders’ “All Risksand Legal Liability Insurance Policy”; and

(ii) furnishes, together with the return ofrelevant turnover for any relevant quarter,copies of the statements, furnished to theController of Exchange in respects of eachmonth comprised in such relevant quarterof turnover prepared in the form specifiedin the Third Schedule to the Notificationissued by the Controller of Exchange undersection 29B of the Exchange Control Act,and net collections prepared in the formspecified in the Fourth, Fifth and SixthSchedules to such Notification.”.

19. Section 59B of the principal enactment as lastamended by Act, No. 8 of 2014 , is hereby further amended inparagraph (b) of subsection (2) of that section as follows:-

(1) in sub-paragraph (ii) of that paragraph, for the wordsand figures “being any year of assessmentcommencing on or after April 1, 2013 does not exceed

Amendment ofsection 59B ofthe principalenactment.


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five hundred million rupees;”, of the words andfigures “ being any year of assessment commencingon or after April 1, 2013, but prior to April 1, 2015 ,does not exceed five hundred million rupees;”; and

(2) by the addition immediately after sub-paragraph (ii)of that paragraph, of the following new sub-paragraph:-

“(iii) being any year of assessment commencingon or after April 1, 2015, does not exceedseven hundred and fifty million rupees.”.

20. Section 59F of the principal enactment is herebyamended by the repeal of subsection (1) of that section andsubstitution therefor, of the following new subsection :-

“(1) Where the taxable income of any individual being acitizen of Sri Lanka, for any year of assessmentcommencing on or after April 1, 2014, includes anyprofits and income from providing professionalservices as a professional (hereinafter in this sectionreferred to as the “relevant profits”) and the rate ofincome tax payable under the First Schedule to thisAct, on a part of such taxable income (hereinafter inthis section referred to as the “relevant part of thetaxable income”) exceeds twelve per centum, thenin regard to the relevant part of the taxable income,the tax payable shall be computed as given below:-

(a) where such relevant part of the taxableincome exceeds the amount of the relevantprofits then the tax payable on suchrelevant part of the taxable income shall becomputed as follows:-

(i) if such relevant profits does notexceed twenty five million rupees,then the tax payable on such

Amendment ofsection 59F ofthe principalenactment.


portion of the relevant part of thetaxable income as is equal to therelevant profits, shall be at the rateof twelve per centum, and the taxpayable on the balance of therelevant part of the taxable income,shall be computed according tosuch of the rates above twelve percentum, as are applicable theretounder the First Schedule to this Act;or

(ii) if such relevant profits exceedtwenty five million rupees, then thetax payable,

- on such portion of the relevantpart of the taxable income as isequal to twenty five millionrupees shall be at twelve percentum;

- on such protion of the balanceas does not exceed ten millionrupees shall be at the rate offourteen per centum; and

- on any balance relevant partof the taxable income shall becomputed according to suchof the rates above twelve percentum, as are applicablethereto under the FirstSchedule to this Act subjectto the following:—


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(A) where the rate of income tax,under the First Schedule tothis Act, payable on aportion of such balancerelevant part of the taxableincome exceeds sixteen percentum:

- the tax payable on suchbalance relevant part ofthe taxable income as isnot exceeding the excessof relevant profits overthirty five million rupeesshall be computed atsixteen per centum; and

- the tax payable on anybalance of the relevantpart of the taxableincome, shall becomputed according tosuch of the rates abovesixteen per centum, asare applicable theretounder the First Scheduleto this Act; or

(B) where the rate of income taxpayable under the FirstSchedule to this Act, on anyportion of such balancerelevant part of the taxableincome does not exceedsixteen per centum, thenthe tax payable on theentirety of such balanceshall be computed at sixteenper centum; or


(b) where such relevant part of thetaxable income does not exceed theamount of the relevant profits, thenthe tax payable on the relevant partof the taxable income shall becomputed as follows:-

(i) if such relevant profits donot exceed twenty fivemillion rupees then, the taxpayable on the entirety ofthe relevant part of thetaxable income, shall be attwelve per centum; or

(ii) if the relevant profits exceedtwenty five million rupees,then the tax payable,

- on the portion by whichtwenty five millionrupees exceeds theamount by which therelevant profits exceedrelevant part of thetaxable income shall beat twelve per centum;

- on the portion up to tenmillion rupees of thebalance relevant part ofthe taxable income shallbe at fourteen percentum; and

- on any balance relevantpart of the taxableincome shall be atsixteen per centum.”.


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21. The following new sections are inserted immediatelyafter section 59H of the principal enactment and shall haveeffect as sections 59I, 59J, 59K, 59L and 59M of thatenactment :-

59I. The tax rate applicable on the profitsand income of an existing company carrying ona business of manufacture of products (otherthan liquor or tobacco), on expansion of themanufacturing of such products of suchcompany in any Province other than theWestern Province (not by relocating the existingcompany or part thereof), by investing in theacquisition of fixed assets (other than land orbuilding) not less than three hundred millionrupees for any year of assessment commencingon or after April 1, 2015 but prior to April 1,2017, and which is liable to pay income tax atthe rate specified in item 3 of PART-B of theSecond Schedule to this Act, shall be reducedby fifty per centum up to a maximum notexceeding five hundred million rupees, for theyear of assessment in which such companycommences the commercial operations of suchexpansion project and another four years ofassessment immediately succeeding that yearof assessment.

59J. The tax rate applicable on the profitsand income of any company which is registeredwith the Department of Inland Revenue for taxpurposes on or before December 31, 2015 witha committed investment in excess of fivehundred million rupees, to be made in anymanufacturing business (other than liquor ortobacco based products) not by splitting-up orre - construction of an existing undertaking of

Insertion ofsections 59I, 59J,59K, 59L and 59M

of the principalenactment.

“Rate ofincome taxapplicable toprofits andincome ofanymanufacturingcompanywhich carrieson anexpansion ofsuch businessto anyProvinceother thanthe WesternProvince.

Rate ofincome taxapplicable tothe profitsand incomeof a newcompanyengaged inanymanufacturingbusiness.


any nature within the specified period asapproved by the Commissioner General, shallbe reduced by fifty per centum for the year ofassessment in which such company commencesthe commercial operations and for consecutiveperiod of six years of assessment immediatelysucceeding that year of assessment, if theapplicable rate of income tax is twenty eight percentum.

59K. Such part of the tax computed inaccordance with this Act, for any year ofassessment commencing on or after April 1, 2015,as being payable by any manufacturer whohas been in the business of manufacturingsince the year nineteen seventy and sustainedcompetitiveness with imports, shallnotwithstanding anything to the contrary in anyother provisions of this Act, be reduced by tenper centum, on the profits and income from thesales made on such manufactured products(other than liquor or tobacco based products)in the local market which is liable to tax at themaximum rate of twenty eight per centum onthe profit on ssuch sales.

59L. Such part of the tax computed inaccordance with this Act, for any year ofassessment commencing on or after April 1, 2015,as being payable by any local entrepreneursengaged in the intercropping activities orvegetable and food processing activities, bereduced by fifty per centum, on the profits andincome from such activities.

For the purpose of this section :

“local entrepreneur” means, a personwho is a citizen of Sri Lanka and

Income taxpayable bylocalmanufacturerwho is in thebusiness since1970.

Income taxpayable bylocalentrepreneursengaged inintercroppingactivities orvegetable andfoodprocessingactivities.


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includes a company or partnership,the controlling interest of which isheld by Sri Lankans;

“Intercropping activities” means,cultivation of two or more cropssimultaneously on the same field;

“vegetable and food processingactivities” means, processing ofvegetables or foods by any personwith not less than thirty five percentof local value addition and the finalproduct shall consist of not less thanseventy per centum of locally grownvegetables or locally manufacturedfoods.

59M. Such part of the tax computed inaccordance with this Act, as being payable byany person being a manufacturer or provider ofservices who made investment in anyundertaking for the manufacture or theprovision of services located in any laggingregion in a sum of not less than two hundredand fifty million rupees on or after February 1,2015 but prior to March 31, 2017, shallnotwithstanding anything to the contrary in anyother provisions of this Act, be reduced by fiftyper centum, on the profits and income of suchperson for the year of assessment in which suchundertaking commences business operationsand another four years of assessmentimmediately succeeding that year ofassessment.

For the purpose of this section “laggingregion in relation to any year of assessment”means, any Divisional Secretary’s Division as

Income taxpayable by aperson on anundertakinglocated inany laggingregion.


being in a state of economic backwardness asspecified, by the Commissioner-General byNotice published in the Gazette in consultationwith any appropriate authority within whosejurisdiction such Division comes and with theapproval of the Minister.”.

22. Section 61 of the principal enactment as last amendedby the Act, No. 22 of 2011 is hereby further amended in sub-paragraph (ii) of paragraph (b) of subsection (1) of that section,by the substitution for the words and figures “distributableprofits of such company for the year of assessment”, of thewords and figures “distributable profits of such companyother than a company referred to in paragraph (h) of the firstproviso to paragraph (a) of subsection (1) of section 25, forthe year of assessment”.

23. Section 63 of the principal enactment as lastamended by the Act, No. 8 of 2014 is hereby further amendedby the addition at the end of that section, of the followingparagraph:-

“For the purpose of this section the profits andincome from such dividends which form part of the profitsunder section 3(a) of this Act, means profits and incomeafter deducting expenses in ascertaining the profits fromsuch business of receiving dividends.”.

24. Section 94 of the principal enactment is herebyamended as follows:-

(1) by the substitution for the word “royalties”wherever it occurs in that section, of the words “royalties or fees for technical services”;

(2) in paragraph (b) of that section for the words andfigures “ under section 32,”, of the words and figures“ under section 25,”; and





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(3) by the addition at the end of that section, of thefollowing new paragraph:-

“For the purpose of this section the term “fees fortechnical services” means payments of any kind,received as consideration for managerial or technicalor consultancy services including the provision ofservices of technical or other personnel other thanemployment or professional services performedthrough a fixed base.”.

25. Section 95 of the principal enactment as last amendedby the Act, No. 22 of 2011 is hereby further amended insubsection (1) of that section as follows:-

(1) in paragraph (b) of that subsection by thesubstitution for the words “out of income arising inSri Lanka”, of the following:—

“out of income arising in Sri Lanka; or

(c) fees for technical services referred to insection 94,”;

(2) in paragraph (aaa) of the proviso to that subsection,by the substitution for the words “ provision of thisAct; and”, of the words “ provision of this Act;”;

(3) in paragraph (b) of the proviso to that subsection,by the substitution for the words “ banking unit.”,of the words “ banking unit ; and”; and

(4) by the addition immediately after paragraph (b) ofthe proviso to that subsection, of the following newparagraph:-

“(c) for any year of assessment commencing onor after April 1, 2015, no deduction shall bemade under this section from any interestpaid to any individual on money deposited



in any bank or financial institution and tax isdeductible on such interest at the rate oftwo and a half per centum as referred to insection 133 of this Act.”.

26. The following new section is hereby insertedimmediately after section 105A of the principal enactmentand shall have effect as section 105B of that enactment:-

105B. (1) The Minister may, on therecommendation of the Commissioner-Generalmake regulations for the purpose of authorizingor facilitating the use of electroniccommunications or electronic records in respectof matters specified in section 8 of the ElectronicTransactions Act, No. 19 of 2006.

(2) For the purpose of application of theelectronic means in filing returns, submittinginformation and documents, the relevantsections of the Act are amended as followswhich shall come into effect on such date asthe Minister may appoint by Order publishedin the Gazette.

(a) in sections 28(4), 36(2)(b), 70(1), 73(1),76(3), 104(2), 104A(2), 111, 112, 118, 122,125(1), 130, 133, 162, 163, 165 and 177 bythe substitution for the words “inwriting” wherever it occurs in thosesections, of the words “in writing orelectronic means”, respectively;

(b) in sections 106 and 107 the words “inwriting”, wherever it arising relating tothe filing of return, issue of notices,submission of information or documentsfor the purposes of those sections, bythe substitution, of the words “in writingor electronic means”, respectively;

Insertion of newsection assection 105B inthe principalenactment.

“The use ofelectroniccommunica-tions orelectronicrecords.


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(c) in section 107 in paragraph (a) and inparagraph (b) of the proviso ofsubsection (1) of that section, by thesubstitution for the words “publishedin the Gazette.”, of the words“published in the Gazette or officialwebsite of the Department of InlandRevenue.”, respectively.

27. Section 106 of the principal enactment, as lastamended by the Act, No. 8 of 2014 is hereby further amendedin paragraph (c) of the proviso to subsection (1) of thatsection, by the substitution for the words “income tax at therate of ten per centum has been deducted”, of the words“income tax at the rate specified for the purpose of deductionhas been deducted”.

28. Section 107 of the principal enactment, as lastamended by the Act, No. 8 of 2014 is hereby further amendedby the repeal of paragraph (aa) of subsection (3) of thatsection and the substitution therefor, of the following newparagraph:-

“(aa) “approved accountant” for any year of assessmentcommencing on or after April 1, 2014 means:

(i) an accountant who is a member of theInstitute of Chartered Accountants of SriLanka; or

(ii) an accountant who is a fellow member of theAssociation of Accounting Technicians ofSri Lanka incorporated under the CompaniesAct, No. 07 of 2007 in relation to any personother than a company, or any partnershipwhere the turnover of the business of suchperson or partnership for the year does notexceed five hundred million rupees;”.




29. Section 115 of the principal enactment as lastamended by Act, No. 8 of 2012 is hereby further amended inparagraph (a) of subsection (1) of that section by thesubstitution for sub-paragraph (i), of the following new sub-paragraph:-

“(i) receives remuneration:

(A) for any year ending prior to April 1, 2015,in excess of fifty thousand rupees permonth or six hundred thousand rupees peryear: or

(B) for any year commencing from April 1,2015, in excess of sixty two thousand andfive hundred rupees per month or sevenhundred and fifty thousand rupees peryear;”.

30. Section 133 of the principal enactment as lastamended by the Act, No. 8 of 2014 is hereby further amendedin subsection (4) of that section as follows:-

(1) in paragraph (a) of that subsection-

(a) in sub-paragraph (i) of that paragraph, bythe substitution for the words “of suchinterest; and”, of the words “of suchinterest;”;

(b) in sub-paragraph (ii) of that paragraph bythe substitution for the words “anypartnership”, of the words and figures “forany year of assessment ending prior to April1, 2015, any partnership”;




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(c) by the addition at the end of sub-paragraph(ii) of that paragraph, of the following newsub-paragraphs:-

“(iii) for any year of assessmentcommencing on or after April 1, 2015any partnership, charitable institutionor any individual the deduction shallbe made at the rate of two and a halfper centum of such interest; and

(iv) for any year of assessmentcommencing on or after April 1, 2015,body of persons the deduction shallbe made at the rate of eight per centumof such interest.”;

(2) by the substitution in paragraph (b) of thatsubsection, for the words “any year of assessment,that its assessable income for that year ofassessment”, of the words and figures “any year ofassessment ending prior to April 1, 2015, that itsassessable income”;

(3) by the substitution in paragraph (c) of thatsubsection, for the words “any individual then, inrelation to any year of assessment where”, of thewords and figures “any individual then, in relationto any year of assessment ending prior to April 1,2015 where”; and

(4) by the substitution in paragraph (d) of thatsubsection, for the words “deduction shall be made,at the rate of eight per centum of such interest:”, ofthe words and figures “deduction shall be made forany year of assessment ending prior to April 1, 2015at the rate of eight per centum of such interest:”.


31. Section 137 of the principal enactment as lastamended by the Act, No. 8 of 2014 is hereby further amendedby the addition immediately after subsection (3) of thatsection, of the following new subsection:-

“(4) Any balance amount of notional tax credit entitledto be claimed by any business of insurance prior tosegregation, or any bank, financial institution orleasing company which is acquired, merged oramalgamated, as the case may be, shallnotwithstanding any other provisions of this Act ,be deemed to be an allowable deduction subject tothe conditions, if it would have been claimable ifnot for such segregation (being a business of aninsurance), or acquisition, merger or amalgamationof such bank, financial institution or leasingcompany.”.

32. Section 139 of the principal enactment as lastamended by the Act, No. 10 of 2007 is hereby further amendedby the repeal of subsection (1) of that section and thesubstitution therefor, of the following new subsection:-

“(1) For any year of assessment:

(a) ending prior to April 1, 2015, any person orpartnership from whose interest income theincome tax is deductible by a bank orfinancial institution, or a company whichissues any corporate debt security inaccordance with the provisions of section133 or section 135 and such interest incomewill form part of the assessable income ofsuch person or divisible profit or incomeof the partnership, as the case may be, forany year of assessment, may, if the amountof income tax payable by him or the relevantpartners for such year of assessment is lessthan the income tax deductible during that




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year of assessment under section 133 orsection 135, make an application to theCommissioner-General in such form andcontaining such particulars as may bespecified by the Commissioner General,requesting that a direction be issued to thatbank or financial institution or anycompany which issues corporate debtsecurity, to make the necessaryadjustments in the deduction of income taxin that year of assessment; and

(b) commencing on or after April 1, 2015 anyperson (other than an individual or apartnership) from whose interest incomethe income tax is deductible by a bank orfinancial institution in accordance with theprovisions of section 133 and such interestincome will form part of the assessableincome of such person for any year ofassessment, may, if the amount of incometax payable by such person for such yearof assessment is less than the income taxdeductible during that year of assessmentunder section 133, make an application tothe Commissioner-General in such form andcontaining such particulars as may bespecified by the Commissioner General,requesting that a direction be issued to thatbank or financial institution to make thenecessary adjustments in the deduction ofincome tax in that year of assessment.”.

33. Section 150 of the principal enactment is herebyamended in subsection (1) of that section, by the substitutionfor the words “and shall furnish a return to the Commissioner-General on a monthly basis containing such particulars asmay be specified by the Commissioner-General in relation tosuch deductions.”, of the words and figures,



“and shall furnish a return to the Commissioner-General:

(a) on a monthly basis, for any year of assessmentcommencing prior to April 1, 2015; and

(b) on a quarterly basis, for any year ofassessment commencing on or after April 1,2015,

containing such particulars as may be specified bythe Commissioner-General in relation to suchdeductions.”.

34. Section 159 of the principal enactment is herebyamended in subsection (1) of that section, by the substitutionfor the words “and shall furnish a return on monthly basis,containing such particulars as may be specified by theCommissioner-General in relation to such activity.”, of thewords and figures,

“and shall furnish a return:

(a) on a monthly basis, for any year of assessmentcommencing prior to April 1, 2015 ; and

(b) on a quarterly basis, for any year of assessmentcommencing on or after April 1, 2015,

containing such particulars as may be specified bythe Commissioner-General in relation to suchactivity.”.

35. Section 163 of the principal enactment as lastamended by the Act, No. 8 of 2014 is hereby further amendedin subsection (5) of that section by the repeal of the firstproviso to that subsection and substitution therefor, of thefollowing proviso:-




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“Provided, that nothing in this subsection shall apply tothe assessment of income tax payable by any person in respectof any year of assessment, consequent to-

(i) the receipt by such person of any arrears relating tothe profits from employment of that person for thatyear of assessment;

(ii) any adjustment made in line with the adoption ofthe Sri Lanka Financial Reporting Standards for theyear of assessment in which such adoption wasmade; or

(iii) any profits and income or the loss ascertained inaccordance with the provisions referred to insection 104 or section 104A, as the case may be, forany year of assessment commencing on or afterApril 1, 2013, for any period before the expiry of fiveyears from the date of receipt of such return, wherethe Commissioner General is in the opinion that:

(A) the profits and income or the loss referredto in section 104, of any person, has notbeen ascertained having regard to the arm’slength price, and issue of such assessmentis not contrary to any provision of anagreement in force for the relief of doubletaxation between the Government of SriLanka and the Government of any territoryin which such person is resident; or

(B) the profits and income or the loss referredto in section 104A, of any person, has notbeen ascertained having regard to the arm’slength price:”.

36. Section 212 of the principal enactment as lastamended by the Act, No. 8 of 2014 is hereby further amendedin subsection (2) of that section as follows:-



(1) by the substitution in the paragraph (e) of thatsubsection for the words “Sri Lanka are changed.”,of the words “Sri Lanka are changed;”; and

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

“(f) guidelines for the calculation of qualifyingpayment relating to cost of acquisition ormerger of any bank, financial institution orleasing company and the continuation oftax neutral position after acquisition,merger or amalgamation, as the case maybe, for the purpose of this Act and otherActs administered by the Commissioner-General.;

(g) rules and guidelines for the implementationof the use of electronic communication orelectronic records with regard to the Actsadministered by the Commissioner-Generalfrom time to time as required.”.

37. The Second Scheduleto the principal enactment aslast amended by Act, No. 8 of 2014 is hereby further amendedas follows:-

(1) by the substitution in item (3) of PART-A of thatSchedule, for the words “Any unit trust managementcompany on the taxable income-”, of the words “Anyunit trust management company on the taxableincome from the management of any unit trust-”;

(2) by the substitution in item (1) (c ) of PART-B of thatSchedule, for the words and figures ,

“For any year of assessment commencing on orafter April 1, 2011 –

Any company other than any company engaged inthe manufacture of any article or in the provision ofany services –”, of the words and figures

Amendment ofthe SecondSchedule to theprincipalenactment.


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“For any year of assessment commencing on orafter April 1, 2011, but prior to April 1, 2014 –

Any Company –”;

(3) by the substitution in item (d) of PART–B of thatSchedule, for the words and figures ,

“For any year of assessment commencing on orafter April 1, 2011, but prior to April 1, 2014 –

any company engaged in the manufactureof any article or in the provision of anyservice-”, of the words and figures

“For any year of assessment commencing on orafter April 1, 2014-

any company other than any companyengaged in the manufacture of any article orin the provision of any service-”.

38. The Fourth Schedule to the principal enactment ishereby amended as follows:—

(1) in the heading of that Schedule, by the substitutionfor the words “Royalty or Annuity”, of the words“Royalty, Annuity or Fees for Technical Services”;and

(2) in that Schedule, by the substitution for the words“royalty or annuity”, of the words “royalty, annuityor fees for technical services”.

39. The Fifth Schedule to the principal enactment as lastamended by Act, No. 8 of 2014 is hereby further amended bythe repeal of item 46 thereof.

Amendment ofthe FourthSchedule to theprincipalenactment.

Amendment ofthe FifthSchedule to theprincipalenactment.


Sinhala textto prevail incase ofinconsistency.

40. The amount of tax charged or collected from anyperson by or on behalf of the Commissioner-General, by virtueof the application of any provision of this Act, during theperiod commencing on April 1, 2015 and ending on the dateon which the certificate of the Speaker is endorsed in respectof this Act, shall be deemed for all purposes to have beenvalidly and lawfully charged or collected under this Act bythe Commissioner-General or by such person who chargedor collected such tax on behalf of the Commissioner-General:

Provided that, the aforesaid provision shall not affect anydecision or order made by any Court or any proceedingspending in any Court in respect of any tax charged or collectedduring such period.

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

Validation.


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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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