Act-No-08of-2012-Inland-Revenue-Amendment.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
INLAND REVENUE (AMENDMENT)
ACT, NO. 8 OF 2012
[Certified on 30th March, 2012]
Printed on the Order of Government
Published as a Supplement to Part II of the Gazette of the Democratic
Socialist Republic of Sri Lanka of March 30, 2012
PRINTEDAT THEDEPARTMENT OFGOVERNMENTPRINTING,SRILANKA
TO BEPURCHASED AT THEGOVERNMENT PUBLICATIONSBUREAU, COLOMBO 5
Price : Rs. 18.00 Postage : Rs. 15.00
Inland Revenue (Amendment) Act, No. 8 of 2012 1
[Certified on 30th March, 2012]
L.D.—O. 10 /2012.
ANACT TO AMEND THE INLAND REVENUE ACT, NO. 10 OF 2006
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:—
1. (1) This Act may be cited as the Inland Revenue Short title and
(Amendment) Act, No. 8 of 2012. the date of
operation.
(2) The provisions of this Act, shall come into operation
on April 1, 2012:
Provided however—
(a) the amendments made to section 7 of the Inland
Revenue Act, No.10 of 2006 (hereinafter referred
to as the “principal enactment”) by section 2 (2)
of this Act;
(b) the amendments made to section 16C of the
principal enactment by section 6 of this Act;
(c) the amendments made to section 17A of the
principal enactment by section 9 of this Act,
(d) the amendments made to—
(i) subsection (2) of section 34 of the principal
enactment by the addition of new sub
paragraph (s) to that subsection by section
15 (1) of this Act; and
(ii) paragraph (a) and paragraph (b) respectively
of subsection (4) of section 34 of the principal
encatmant by the addition of new item (A) in
new subparagraph (x) and new item (A) in
2 Inland Revenue (Amendment) Act, No. 8 of 2012
new subparagraph (ix) to that subsection
respectively, by section 15 (2) of this Act,
shall be deemed for all purposes to have come into
operation on April 1, 2011.
Amendment of 2. Section 7 of the principal enactment as last
section 7 of the amended by Act, No. 22 of 2011 is hereby further amended
principal
as follows :—
enactment.
(1) in paragraph (b) of that section—
(a) by the substitution in sub paragraph (xxviii),
for the words and figures “part VIII of the
Companies Act, No. 17 of 1982”, of the words
and figures “part XI of the Companies Act,
No. 7 of 2007”;
(b) by the substitution in sub-paragraph (lxi), for
the words and figures “the profits and income
of the Insurance Board of Sri Lanka,
established by the Regulation of Insurance
Industry Act, No. 43 of 2000,”, of the words
and figures “the Insurance Board of Sri Lanka,
established by the Regulation of Insurance
Industry Act, No. 43 of 2000;”;
(c) by the addition, immediately after
sub-paragraph (lxi), of the following new
sub-paragraphs:—
“(lxii) the Institute of Certified Management
Accountants of Sri Lanka established
by the Institute of Certified
Management Accountants of Sri Lanka
Act, No. 23 of 2009; and
(lxiii) the Fund established by the National
Child Protection Authority Act, No. 50
of 1998.”;
Inland Revenue (Amendment) Act, No. 8 of 2012 3
(2) in paragraph (e) of that section—
(a) by the substitution for the words and figures
“the profits and income accruing prior to
April 1, 2011, of a charitable institution,”, of
the words “the profits and income of a
charitable institution,”;
(b) by the substitution in sub-paragraph (i) of
that paragraph, for the words “the profits of a
business”, of the words and figures “the profits
for any year of assessment commencing prior
to April 1, 2011, of a business”.
3. Section 9 of the principal enactment as last amended Amendment of
by Act, No. 22 of 2011 is hereby further amended as section 9 of the
principal
follows:— enactment.
(1) in paragraph (a) of that section by the substitution
for the words “if such loan is approved by the
Minister as being essential for the economic progress
of Sri Lanka;”, of the following words and figures,
“if such loan is—
(i) granted prior to April 1, 2012, and approved
by the Minister as being essential for the
economic progress of Sri Lanka; or
(ii) granted on or after April 1, 2012;”.
(2) in paragraph (b) of that section by the substitution
for the words “if such loan is approved by the
Minister as being essential for the economic progress
of Sri Lanka;”, of the following words and figures,
“if such loan is—
(i) granted prior to April 1, 2012, and approved
by the Minister as being essential for the
economic progress of Sri Lanka; or
(ii) granted on or after April 1, 2012;”.
4 Inland Revenue (Amendment) Act, No. 8 of 2012
Amendment of 4. Section 10 of the principal enactment as last amended
section 10 of the by Act, No. 9 of 2008, is hereby further amended in
principal
subsection (1) as follows :—
enactment.
(1) in paragraph (i) of that subsection, by the substitution
for the words “within one year thereafter.”, of the
words “within one year thereafter;”;
(2) in paragraph (j) of that subsection, by the
substitution for the words “through a bank.”, of the
words “through a bank;”;
(3) by the addition immediately after paragraph (j) of
that subsection, of the following new paragraph:—
“(k) any dividend paid to a shareholder of a
company out of such profits and income
of that company which are exempt from
income tax under section 16C or section
17A of this Act, if such dividend is paid
during the period for which such profits
and income are exempt from income tax:
Provided that where such company is a
resident company engaged in any
construction project, then such exemption
shall be applicable to any dividend paid
by such company during the period for
which such profits and income are exempt
from income tax or within one year
thereafter.”.
Amendment of 5. Section 13 of the principal enactment as last amended
section 13 of the by Act, No. 22 of 2011 is hereby further amended as
principal
enactment. follows:—
(1) by the insertion immediately after paragraph (t) of
that section, of the following new paragraph:—
“(tt) the profits and income accruing to any
person from the redemption of a unit of a
Unit Trust or a Mutual Fund;”;
Inland Revenue (Amendment) Act, No. 8 of 2012 5
(2) by the insertion immediately after paragraph (v) of
that section, of the following new paragraph :-
“(vv) the profits and income of any individual
who is not a citizen of Sri Lanka and who
is brought to Sri Lanka as a trainer of any
sport, being profits and income derived
by such individual in the capacity of such
trainer in Sri Lanka;”;
(3) by the substitution in sub-paragraph (ii) of
paragraph (xxxxxx) for the words and figures
“section 17C;”, of the words and figures “section
16C;”;
(4) by the insertion immediately after paragraph (yyyyy)
of that section, of the following new paragraph :-
“(yyyyyy) any royalty received in foreign currency
by any person resident in Sri Lanka from
outside Sri Lanka, if such royalty is
remitted to Sri Lanka through a bank;”;
(5) by the insertion immediately after paragraph (zzzzz)
of that section, of the following new paragraph :-
“(zzzzzz) the profits and income arising or accruing
to any person from the administration of
any sports ground, stadium or sports
complex.”.
6. Section 16C of the principal enactment is hereby Amendment of
amended as follows:- section 16C of
the principal
enactment.
(1) by the substitution in subsection (1) of that section,
for the words “shall be exempt from income tax for
a period of three years reckoned from”, of the words
“shall be exempt from income tax for the period
specified in Column III as corresponding to the
investment specified in Column II and the types of
activities specified in Column I of the Schedule
hereto reckoned from,”;
6 Inland Revenue (Amendment) Act, No. 8 of 2012
(2) by the insertion, immediately after subsection (1)
of that section, of the following Schedule :—
“SCHEDULE
Column I Column II Column III
(Activities) (Amount of investment (Period of
– in Rupees) exemption)
Agriculture, animal Not less than 25 4 years
husbandry or million, but less than
fishing (including 50 million
processing), creative
work including work
of an artist,
Information
Technology
Any activity referred Not less than 50 4 years
to in paragraph (a) of million, but less than
subsection (2), but 100 million
not including services
relating to agriculture
(products shall be Not less than 5 years
with a minimum of 100 million but less
35% value addition, than 200 million
if more than 50% of
the production is to
be sold in the Not less than 200 6 years”.
domestic market) million
(3) by the repeal of subsection (2) of that section and
the substitution therefor of the following new
subsection:—
“(2) For the purposes of subsection (1), “new
undertaking” means an undertaking –
(a) which is engaged in –
(i) agriculture, animal husbandry or
fishing;
(ii) the manufacture of any article
(including the processing of such
article), other than any liquor or any
tobacco product;
Inland Revenue (Amendment) Act, No. 8 of 2012 7
(iii) the provision of services of Information
Technology;
(iv) software development;
(v) business process outsourcing;
(vi) knowledge process outsourcing;
(vii) the provision of healthcare services;
(viii) the provision of educational services;
(ix) the provision of beautycare services;
(x) the provision of cold room and storage
facilities;
(xi) tourism;
(xii) fitness centre services or providing
facilities for sports;
(xiii) creative work including work of an
artist;
(xiv) mini hydro power projects;
(b) in which the sum invested in the acquisition
of fixed assets after March 31, 2011 but prior
to April 1, 2015 is not less than the
corresponding sum specified in Column II
of the Schedule to subsection (1); and
(c) which commences commercial operations
on or after April 1, 2011.
For the purposes of this section “the amount of
investment” means the cost of any land, plant,
machinery, equipment and other fixed assets.”.
8 Inland Revenue (Amendment) Act, No. 8 of 2012
Insertion of new 7. The following new section is hereby
section 16D in
inserted immediately after section 16C of the principal
the principal
enactment. enactment and shall have effect as section 16D of that
enactment :-
“Exemption 16D. The profits and income within the
for five meaning of paragraph (a) of section 3
years,of
profits and (other than any profits and income from the
income of sale of any capital asset) of any new
strategic undertaking established on or after April 1,
import 2012 and engaged in the manufacture of
replacement
undertakings any of the products referred to in Column I of
engaged in the Schedule hereto with an amount not
the less than the corresponding minimum
manufacture investment referred to in Column II thereof,
of specified
products. shall be exempt from income tax for a period
of five years reckoned from the commencement
of the year of assessment in which
such undertaking commences to make
profits from transactions entered into in that
year of assessment or from the commencement
of the year of assessment immediately
succeeding the year of assessment in which
such undertaking completes a period of
two years from the date on which such
undertaking commences to carry on commercial
operations; which ever occurs earlier.
SCHEDULE
Column I Column II
(Product) (Minimum Investment in
USD Million)
Fabric 5
Pharmaceutical 10
Milk Powder 30
Cement 50”.
Inland Revenue (Amendment) Act, No. 8 of 2012 9
8. Section 17 of the principal enactment, as last Amendment of
section 17 of the
amended by Act, No. 22 of 2011, is hereby further amended
principal
in subsection (2) of that section as follows:- enactment.
(1) in paragraph (a) of that subsection, by the
substitution in sub-paragraph (ii), for the words
“rupees ten million invested in such undertaking,”,
of the words and figures “rupees ten million invested
not later than March 31, 2012, in such
undertaking,”;
(2) in paragraph (b) of that subsection, by the
substitution for the words “which qualify under the
same investment criteria”, of the words and figures
“which qualify under the same investment criteria
and incorporated prior to April 1, 2002”; and
(3) in paragraph (c) of that subsection, by the
substitution for the words “Order published in the
Gazette”, of the words and figures “Order published
in the Gazette not later than March 31, 2012”.
9. Section 17A of the principal enactment, is hereby Amendment of
amended as follows :- section 17A of
the principal
enactment.
(1) in subsection (1) of that section –
(a) by the substitution for the words “shall be
exempted from income tax for a period of
five years reckoned from”, of the words “shall
be exempt from income tax for the period
specified in Column II of the Schedule hereto
as corresponding to the investment specified
in Column I of that Schedule, reckoned
from”; and
(b) by the repeal of the proviso to that subsection
and the substitution therefor, of the following
schedule:-
10 Inland Revenue (Amendment) Act, No. 8 of 2012
“SCHEDULE
Column I Column II
(Investment in Rupees Million) (Exemption
period)
More than 300 and not more 6 years
than 500
More than 500 and not more 7 years
than 700
More than 700 and not more 8 years
than 1,000
More than 1,000 and not more 9 years
than 1,500
More than 1,500 and not more 10 years
than 2,500
More than 2,500 12 years”;
(2) by the substitution for the subsection (2) of that
section, of the following new subsection :-
“(2) For the purposes of subsection (1), “new
undertaking” means any undertaking—
(a) which is engaged in any of the activities
specified below:-
(i) manufacture of boats, pharmaceuticals,
tyres and tubes, motor spare parts,
furniture, ceramics, glass ware or other
mineral based products, rubber based
products, cosmetic products, edible
products manufactured out of locally
cultivated agricultural products,
construction materials or electrical or
electronic goods;
(ii) manufacture, production or processing
of non-traditional goods for export,
including deemed exports which shall
constitute not less than ninety per
centum of the total production and in
the case of apparels, seventy five per
centum of the total production ;
Inland Revenue (Amendment) Act, No. 8 of 2012 11
(iii) cultivation of food crops or industrial
crops;
(iv) horticulture;
(v) forestry;
(vi) animal husbandry in relation to dairy,
poultry, swine, goat etc;
(vii) provision of services to a person or
partnership outside Sri Lanka, for
payment where the total amount of such
payment shall not be less than seventy
per centum in convertible foreign
currency;
(viii) tourism or tourism related projects;
(ix) hotels, guest houses or similar services;
(x) infrastructure projects including
construction of commercial buildings;
(xi) development of any warehousing or
storage facility;
(xii) power generation using renewable
resources;
(xiii) establishment of industrial estates,
special economic zones or knowledge
cities;
(xiv) urban housing or town centre
development;
(xv) provision of any sanitation facility or
waste management systems;
(xvi) development of water services;
(xvii) development of internal water ways, or
related transport (goods or passengers);
12 Inland Revenue (Amendment) Act, No. 8 of 2012
(xviii) construction of hospitals and provision
of health care services;
(xix) repair of aircrafts or maritime vessels or
ship breaking;
(xx) sporting services (e.g. motor racing or
golf course);
(xxi) information technology;
(xxii) software development;
(xxiii) business or knowledge process
outsourcing;
(xxiv) any project in light or heavy
engineering industry;
(xxv) artificial insemination for cattle (dairy
development);
(xxvi) provision of educational services;or
(xxvii) any other activity, as may be prescribed
by the Minister taking into
consideration the development of
national economy ; and
(b) which commences commercial operations
on or after April 1, 2011;
(3) in the marginal note to that section by the
substitution for the words “ engaged in any
prescribed activities.”, of the words “engaged in
any specified activities.”.
Amendment of 10. Section 19 of the principal enactment is hereby
section 19 of the amended in subsection (2), by the substitution for the words
principal
“invested within one year from the commencement of the
enactment.
undertaking”, of the words and figures “invested within one
year from the commencement of the undertaking, but not
later than March 31, 2012”.
Inland Revenue (Amendment) Act, No. 8 of 2012 13
11. Section 23 of the principal enactment is hereby Amendment of
amended in sub section 6 of the definition of the expression section 23 of the
principal
“venture capital company” by the substitution for the words
enactment.
and figures “Companies Act, No. 17 of 1982”, of the words
and figures “Companies Act, No. 7 of 2007”.
12. Section 25 of the principal enactment as last Amendment of
amended by Act, No. 22 of 2011 is hereby further amended section 25 of the
principal
in subsection (1) of that section as follows :-
enactment.
(1) in paragraph (c) of the proviso to paragraph (a) of
that section by the substitution for the words and
figures “acquired on or after April 1, 2007 and”, of
the words and figures “acquired on or after April 1,
2007 but prior to April 1, 2011”;
(2) by the addition immediately after paragraph (c) of
the proviso to paragraph (a) of that section, of the
following new paragraph :-
“(d) where for energy efficiency purposes, any
high tech plant, machinery or equipment is
acquired on or after April 1, 2012, the rate
shall be fifty per centum of the cost of
acquisition;”
(3) by the substitution in paragraph (i) of that section
for the words “any trade or business carried on by
such person;”, of the following words and figures:—
“any trade or business carried on by such person:
Provided that for any year of assessment
commencing on of after April 1, 2012, the
deduction shall be an amount equal to three
hundred per centum of such expediture incurred
by such person, if such research is carried out
through any Government institution;
For the purposes of this paragraph—
(i) “Government institution” includes any
company, where fifty per centum or more of
the shares are held by the Government; and
14 Inland Revenue (Amendment) Act, No. 8 of 2012
(ii) “scientific, industrial, agricultural or any other
research” means any such research which is
carried out for product or produce innovation,
or improving the quality or character of any
product, produce or service but does not
include any market research or feasibility
studies.
(4) by the substitution in sub-paragraph (i) to the
proviso to paragraph (k) of that subsection for the
words and figure “Chapter XIV of this Act” of the
words and figures “Chapter XIV of this Act, where
such benefit is not exempt under paragraph (s) of
subsection (1) of section 8 of this Act,”;
(5) in paragraph (s) of that subsection by the
substitution for the words “that year if assessment
and in any previous year of assessment shall not
exceed one per centum of the value of Initial Public
Offering of Such company.”, of the words “that year
of assessment and in any previous year of assessment
shall not exceed one per centum of the value of the
Initial Public Offering of such company;”;
(6) by the addition immediately after paragraph (s) of
that subsection of the following new paragraph :-
“(t) any expenditure incurred by any person in
the maintenance or management of any
sports ground, stadium or sports complex.”.
Amendment of 13. Section 26 of the principal enactment as last
section 26 of the amended by Act, No. 22 of 2011 is hereby further amended
principal
in subsection (1) of that section as follows :-
enactment.
(1) by the substitution in sub-paragraph (ii) of
paragraph (c) of that subsection, for all the words
commencing from “in foreign currency:” to
“business for that year of assessment;” of the
following :-
“in foreign currency; or
Inland Revenue (Amendment) Act, No. 8 of 2012 15
(iii) services relating to design development,
product development or product
innovation by such person being a
company engaged exclusively in the
provision of such services:”
Provided that for any year of assessment
commencing on or after April 1, 2011—
(A) such part of expenditure incurred
in travelling outside Sri Lanka in
the production of profits or
income from any trade or business
carried on or exercised in Sri
Lanka by any person, after
deducting therefrom–
(i) such expenses incurred in
travelling outside Sri Lanka
solely in connection with
the promotion of export
trade of any article or goods
or the provision of any
service for payment in
foreign currency; or
(ii) such expenditure incurred in
travelling outside Sri Lanka
in carrying out an approved
programme as referred to in
paragraph (d); or
(iii) for any year of assessment
commencing on or after
April 1, 2012, such
expenditure incurred in
travelling outside Sri Lanka,
by any company engaged
exclusively in the provision
of services relating to design
development, product
development or product
innovation;
16 Inland Revenue (Amendment) Act, No. 8 of 2012
(B) an amount equal to two per
centum of the profits and income
of such trade or business in the
immediately preceding year of
assessment,
whichever is lower, shall be deductible in
ascertaining the profits and income from such trade
or business for that year of assessment;”;
(2) by the substitution in the proviso to paragraph (x),
for the words and figures “Companies Act, No. 17
of 1982;”, of the words and figures “Companies
Act, No. 7 of 2007;”.
Amendment of 14. Section 32 of the principal enactment as last
section 32 of amended by Act, No.22 of 2011 is hereby further amended
the principal
enactment. in subsection (5) by the insertion immediately after paragraph
(d) of that subsection of the following new paragraph :-
“(e) where any person commenced to carry on any
business the annual turnover of which does not
exceed rupees five hundred million, any
commencement expenses other than the capital
expenses incurred by that person in the year of
assessment immediately preceding the year of
assessment in which the commercial operation
of such business is commenced, shall be
deducted from the total statutory income of that
person for that year of assessment in which
commercial operation commenced.”.
Amendment of 15. Section 34 of the principal enactment as last
section 34 of the amended by Act, No. 22 of 2011 is hereby further amended
principal
as follows :-
enactment.
(1) in subsection (2) of that section –
(a) by the substitution in paragraph (p) of that
subsection for the words and figures
“subsection (2) of section 21A; and” of the
words and figures “subsection (2) of section
21A;”;
Inland Revenue (Amendment) Act, No. 8 of 2012 17
(b) by the substitution in paragraph (q) of that
subsection for the words and figures
“paragraph (zzz) of section 13”, of the words
and figures “paragraph (zzz) of section 13;”;
(c) by the addition immediately after paragraph
(q) of that subsection of the following new
paragraphs :-
“(r) expenditure incurred by any person in
any community development project
carried on in any economically
marginalised village as identified and
published in the Gazette by the
Commissioner- General;
(s) investment of not less than fifty million
rupees in fixed assets made by any
person on or after April 1, 2011 but
before April 1, 2015 in the expansion
of any undertaking which would have
been qualified for exemption under
section 16C or section 17A had such
undertaking commenced to carry on
business on or after April 1, 2011; and
(t) investment of not less than any sum
referred to in Column II of the Schedule
to section 16D of this Act made in fixed
assets in any undertaking engaged in
the manufacture of any product referred
to in Column I of that Schedule, being
an investment which would have
qualified such undertaking for
exemption under section 16D, referred
to above had such undertaking
commenced to carry on business on or
after April 1, 2012;”;
(2) in subsection (4) of that section —
(a) by the substitution in sub-paragraph (i) of
paragraph (a) of that subsection for the words
18 Inland Revenue (Amendment) Act, No. 8 of 2012
and figures “(n), (o) and (q) of subsection (2)”
of the words and figures “(n), (o), (q), (r), (s)
and (t) of subsection (2)”;
(b) by the addition immediately after sub-
paragraph (viii) of paragraph (a) of that
subsection of the following new sub-
paragraphs :-
“(ix) in respect of all qualifying payments
referred to in paragraph (r) of subsection
(2) made by him in that year of
assessment shall not exceed one million
rupees;
(x) in respect of all qualifying payments—
(A) referred to in paragraph (s) of
subsection (2) made by him in
that year of assessment shall not
exceed twenty five per centum of
such qualifying payment:
Provided however, where
investments made in more than
one year of assessment are
aggregated to reach the minimum
investment to qualify for
deduction as qualifying
payment, such investment made
in any previous year of
assessment (being any year of
assessment commencing on or
after April 1, 2011) shall be
deemed to be an investment made
in the year of assessment in which
the fifty million rupees aggregate
is reached;
(B) referred to in paragraph (t) of
subsection (2) made by him in
that year of assessment shall not
exceed twenty five per centum of
such qualifying payment:
Inland Revenue (Amendment) Act, No. 8 of 2012 19
Provided however, where
investments made in more than
one year of assessment are
aggregated to reach the minimum
investment to qualify for
deduction as qualifying
payment, such investment made
in any previous year of
assessment (being any year of
assessment commencing on or
after April 1, 2012) shall be
deemed to be an investment made
in the year of assessment in which
the respective minimum
investment referred to in section
59C is reached;
(c) by the substitution in sub-paragraph (i) of
paragraph (b) of that subsection for the words
and figures “(n), (o) and (q) of subsection (2)”,
of the words figures “(n), (o), (q), (r), (s) and (t)
of subsection (2);
(d) by the substitution in sub-paragraph (vii) of
paragraph (b) of that subsection for the words
“ten million rupees.”, of the words “ten
million rupees;”;
(e) by the addition immediately after sub-
paragraph (vii) of paragraph (b) of that sub
section of the following new sub-paragraphs:-
“(viii) in respect of all qualifying payments
referred to in paragraph (r) of subsection
(2) made by that company in that year
of assessment shall not exceed ten
million rupees;
(ix) in respect of all qualifying payments—
(A) referred to in paragraph (s) of
subsection (2) made by that
company in that year of
20 Inland Revenue (Amendment) Act, No. 8 of 2012
assessment shall not exceed
twenty five per centum of such
qualifying payment:
Provided however, where
investments made in more than
one year of assessment are
aggregated to reach the minimum
investment to qualify for
deduction as qualifying
payment, such investment made
in any previous year of
assessment (being any year of
assessment commencing on or
after April 1, 2011) shall be
deemed to be an investment made
in the year of assessment in which
the fifty million rupees aggregate
is reached;
(B) referred to in paragraph (t) of
subsection (2) made by him in
that year of assessment shall not
exceed twenty five per centum of
such qualifying payment:
Provided however, where
investments made in more than
one year of assessment are
aggregated to reach the minimum
investment to qualify for
deduction as qualifying
payment, such investment made
in any previous year of
assessment (being any year of
assessment commencing on or
after April 1, 2012) shall be
deemed to be an investment made
in the year of assessment inwhich
the respective minimum
investment referred to in section
59C is reached;
Inland Revenue (Amendment) Act, No. 8 of 2012 21
‘(3) by the insertion immediately after subsection (7) of
that section, of the following new subsection:—
“(7A) The seventy five per centum of any
qualifying payment referred to in sub-paragraph
(x) of paragraph (a) or sub- paragraph (ix) paragraph
(b) of subsection 4, may be apportioned in equal
amounts over a period of three years of assessment
immediately succeeding that year of assessment and
such apportioned amount shall be deuctible from
the assessable income of that person in each such
year of assessment.”.
16. Section 35 of the principal enactment is hereby Amendment of
amended as follows:- section 35 of the
principal
(1) in paragraph (a) of subsection (1) of that section, enactment.
by the substitution for the words and figures “Part I
of the First Schedule” of the words and figures “Part
I, Part IA or Part IB of the First Schedule”;
(2) in subsection (2) of that section, by the substitution
for the words and figures “Part I of the First
Schedule” wherever appears in that subsection, of
the words and figures “Part I, Part IA or Part IB of
the First Schedule”.
17. Section 45 of the principal enactment as last Amendment of
amended by Act, No. 22 of 2011 is hereby further amended section 45 of the
principal
in paragraph (c) of subsection (2) of that section as follows :-
enactment.
(a) by the substitution in sub-paragraph (ii), for the
words “roads or bridges; or” of the words “roads or
bridges;”;
(b) by the substitution in sub-paragraph (iii), for the
words “drainage or sewerage system;”, of the words
“drainage or sewerage system; or”;
(c) by the addition, immediately after sub-paragraph
(iii), of the following sub-paragraph :-
“(iv) harbour, airport or any infrastructure project
in telecommunication or electricity;”.
22 Inland Revenue (Amendment) Act, No. 8 of 2012
Insertion of new 18. The following new section is hereby inserted
section 48B in immediately after section 48A of the principal enactment
the principal
and shall have effect as section 48B of that enactment:-
enactment.
“Rate of 48B. Such part of the profits and income from
income tax any strategic import replacement undertaking
applicable to
referred to in section 16D, included in the
strategic
import taxable income of any person for any year of
replacement assessment commencing after the date of expiry
undertaking of tax exemption under that section, shall
after the notwithstanding anything to the contrary in
expiry of the any other provisions of this Act, be taxable at
period of
exemption. the appropriate rate specified in the Fifth
Schedule to this Act.”.
Amendment of 19. Section 59B of the principal enactment is hereby
section 59B of amended in subsection (1) of that section, by the substitution
the principal
for the words “income of any person for any year of
enactment.
assessment”, of the words “income of any person (not being
the holding company, a subsidiary company, or an associate
company of a group of companies) for any year of
assessment”.
Insertion of new 20. The following new section is hereby inserted
section 59C in immediately after section 59B of the principal enactment
the principal
and shall have effect as section 59C of that enactment:-
enactment.
“Tax rate 59C. (1) The profits and income within the
applicable to meaning of paragraph (a) of section 3, (other
strategic
than any profits and income from the sale
import
replacement of any capital asset), of any existing
undertakings. undertaking referred to in subsection (2), and
carried on by any person or partnership, shall
notwithstanding anything to the contrary in
any other provisions of this Act, be taxable at
the appropriate rate specified in the Fifth
Schedule to this Act for a period of five years
reckoned from the commencement of the year
of assessment in which such undertaking
satisfies the minimum investment as specified
under subsection (2).
Inland Revenue (Amendment) Act, No. 8 of 2012 23
(2) For the purpose of subsection (1),
“existing undertaking” means an undertaking
which is engaged in the manufacture of
products specified in Column I below with a
minimum investment as specified in Column
II below made in fixed assets as an expansion
on or after April 1, 2011 –
Column I Column II
(product) (Minimum investment in
USD or its equivalent)
Fabric 5 million
Pharmaceuticals 10 million
Milk powder 30 million
Cement 50 million”.
21. Section 107 of the principal enactment as last Amendment of
amended by Act, No. 9 of 2008 is hereby further amended as section 107 of
the principal
follows :-
enactment.
(1) in paragraph (a) of the proviso to subsection (1) of
that section by the substitution for all the words
commencing from “any quoted public company or
any other company,”, to “such quoted public
company or other company,”, of the words “any
quoted public company, any other company which
is a member of a group of companies of which at
least one company is a quoted public company, or
any other company having an annual turnover of
not less than two hundred and fifty million rupees
or net profit of not less than one hundred million
rupees for that year, then, notwithstanding that a
notice under this section has not been given to such
quoted public company, other member company
of the group, or other company,”;
(2) in paragraph (a) of the proviso to subsection (2) of
that section, by the substitution for the words “any
quoted public company, in respect of”, of the words
“any quoted public company, any other company
24 Inland Revenue (Amendment) Act, No. 8 of 2012
which is a member of a group of companies of which
at least one company is a quoted public company,
in respect of”.
Amendment of 22. Section 108 of the principal enactment is hereby
section 108 of amended in subsection (2), by the substitution for the words
the principal
and figures “Companies Act, No.17 of 1982,”, of the words
enactment.
and figures “Companies Act, No. 7 of 2007,”.
Amendment of 23. Section 113 of the principal enactment is hereby
section 113 of amended by the addition immediately after subsection (4)
the principal
of that section, of the following new subsection:-
enactment.
“(5) Any bank or financial institution shall
invest five per centum of its taxable income in such
instalment as may be specified by the
Commissioner-General on or before the same dates
as specified for income tax purposes in subsection
(1) of this section in the investment fund
established in accordance with the guidelines issued
for this purpose by the Central Bank of Sri Lanka
with the concurrence of the Commissioner-General
for a period of three years commencing from April
1, 2011 or where such bank or financial institution
is established after April 1, 2011, then, from the
date of such establishment.”.
Amendment of 24. Section 115 of the principal enactment is hereby
section 115 of amended in subsection (1), by the substitution for the
the principal paragraph (a) of that subsection of the following new
enactment. paragraph (a) :—
“(a) any resident individual who –
(i) receives remuneration in excess of fifty
thousand rupees per month or six hundred
thousand rupees per year;
(ii) is a director or non executive director to
whom any payment is made or is due by or
from such employer or who receives any
other benefit as an employee or in any other
capacity; or”.
Inland Revenue (Amendment) Act, No. 8 of 2012 25
25. Section 191 of the principal enactment is hereby Amendment of
amended by the substitution for the words and figures section 191 of
the principal
“Companies Act, No. 17 of 1982” wherever appears in that
enactment.
section, of the words and figures “Companies Act, No. 7 of
2007”.
26. Section 217 of the principal enactment as last Amendment of
amended by Act, No. 22 of 2011 is hereby further amended section 217 of
the principal
as follows :-
enactment.
(1) in the definition of the expression “dividends” by
the substitution in sub-paragraph (iii) of paragraph
(a) for the words “any other company; and ”, of the
words “any other company; or
(iv) scrip dividend or dividend in specie ; and ”;
(2) in the definition of the expression “public
corporation”, by the substitution for the words and
figures “Companies Act, No.17 of 1982,”, of the
words and figures “Companies Act, No. 7 of 2007,”.
27. The First Schedule to the principal enactment, as Amendment of
the First
last amended by Act, No. 22 of 2011, is hereby further
Schedule to the
amended in PART V of that Schedule by the substitution principal
for the words and figures “as per Part I”, of the words and enactment.
figures “as per Part I, Part IA or Part IB”.
28. The Second Schedule of the principal enactment, Amendment of
as last amended by Act, No. 22 of 2011 is hereby further the Second
Schedule to the
amended in paragraph (b) of item 3 of PART – B, by the
principal
substitution for the words and figures “commencing after enactment.
April 1, 2011”, of the words and figures “commencing on or
after April 1, 2011”.
29. The Third Schedule to the principal enactment, as Amendment of
the Third
last amended by Act, No. 22 of 2011, is hereby further
Schedule to the
amended as follows:— principal
enactment.
(1) by the substitution for item 1 of that Schedule, of
the following item:—
26 Inland Revenue (Amendment) Act, No. 8 of 2012
“1. Hindu undivided families –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 24 per centum”;
(2) by the substitution for item 3 of that Schedule, of
the following item:—
“3. Executor (other than trustees under last wills) and
receivers (other than liquidators) –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 24 per centum”;
(3) by the substitution for item 4 of that Schedule, of
the following item:—
“4. Trustees (including trustees under last wills) –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 24 per centum ”;
(4) by the substitution for item 5 of that Schedule, of
the following item:—
Inland Revenue (Amendment) Act, No. 8 of 2012 27
“5. Partnerships –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 24 per centum”;
(5) by the substitution for item 6 of that Schedule, of
the following item:—
“6. Partnerships (on any assessment made) –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 24 per centum ”;
(6) by the substitution in paragraph (b) of item 8 of
that Schedule, for the words and figures
“commencing prior to April 1, 2011”, of the words
and figures “commencing on or after April 1, 2011”;
(7) by the substitution for item 11 of that Schedule, of
the following item:—
“11. Governments (other than the Government of Sri
Lanka and the Government of the United Kingdom)-
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 28 per centum”;
28 Inland Revenue (Amendment) Act, No. 8 of 2012
(8) by the substitution for item 12 of that Schedule, of
the following item:—
“12. Business Undertakings vested in the Government
under the Business Undertakings (Acquisition) Act, No. 35
of 1971-
(i) on the taxable income –
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 28 per centum;
(ii) on the balance of the profits after deduction
therefrom of the tax payable under paragraph
(i)”; 25 per centum;
(9) by the substitution for item 15 of that Schedule, of
the following item:—
“15. Persons (other than those referred to above and in
the First or Second Schedule)-
(a) for any year of
assessment
commencing prior to
April 1, 2011; 30 per centum
(b) for any year of
assessment
commencing on or
after April 1, 2011; 28 per centum ”.
Amendment of 30. The Fifth Schedule of the principal enactment, as
the Fifth last amended by Act, No. 22 of 2011, is hereby further
Schedule to the
amended as follows :-
principal
enactment.
(1) by the substitution in item 14A of that schedule, for
the words “commencing prior to April 1, 2011”, of
the words and figures “commencing on or after
April 1, 2011”;
Inland Revenue (Amendment) Act, No. 8 of 2012 29
(2) by the substitution for the item 33 of that Schedule
of the following:-
“33. The rate of income tax As per the First
applicable to profits and Schedule but
income of any person from subject to a
any undertaking referred to maximum of 10
in section 59B. per centum for
an individual
and 10 per
centum for a
company.
(3) by the addition, immediately after item 33 of that
Schedule of the following new items :-
“34. The rate of income tax in As per the First
respect of profits of any Schedule but
subject to a
person from any
maximum of 12
undertaking referred to in per centum for
section 48B an individual
and 12 per
centum for a
company.
35. Rate of income tax As per the First
applicable to profits and Schedule but
subject to a
income of any person from
maximum of 12
any undertaking referred to per centum for
in section 59C, for any year an individual
of assessment falling within and 12 per
the five year period referred centum for a
to therein. company.”.
36. The rate of income tax
applicable to profits of any
branch of a commercial
bank, being a branch
established after November
21, 2011 and which is solely
engaged in development
banking. 24 per centum.
30 Inland Revenue (Amendment) Act, No. 8 of 2012
37. The rate of income tax As per the First
applicable to profits and Schedule, but
income of any person from subject to a
research activities defined in maximum of
paragraph (i) of subsection 16 per centum
(1) of section 25. for an individual
and 20
per centum for
a company.
38. The rate of income tax As per the First
applicable to profits and Schedule but
income of any person from subject to a
the provision of health care maximum of 12
services. per centum for
an individual
and
12 per centum
for a company.
39. The rate of income tax
applicable to any grower or
manufacturer of tea who has
established a joint venture
with a tea exporter for
exporting pure Sri Lankan
tea, in value added form with
a Sri Lankan brand name,
on the manufacturing
income attributable to the tea
purchased from a tea
auction in Sri Lanka for that
purpose by the joint venture. 12 per centum.
40. The rate of income tax As per the First
applicable to profits and Schedule but
income of any person subject to a
engaged in the maximum of 12
manufacture (locally) of per centum, for
handloom products. an individual
and 12 per
centum for a
company.
Sinhala text to 31. In the event of any inconsistency between the
prevail in case Sinhala and Tamil texts of this Act, the Sinhala text shall
of an
prevail.
inconsistency.
Inland Revenue (Amendment) Act, No. 8 of 2012 31
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 15th
December each year in respect of the year following.
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