Act no 12 OF 2012

Act-no-12of2012-Finance.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
—————————
FINANCE ACT, No. 12 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, 2010
PRINTEDATTHEDEPARTMENTOFGOVERNMENTPRINTING,SRILANKA
TOBEPURCHASEDATTHEGOVERNMENTPUBLICATIONSBUREAU,COLOMBO5
Price : Rs. 11.00 Postage : Rs. 10.00

Finance Act, No. 12 of 2012 1
[Certified on 30th March, 2012]
L.D.— O. 8/2012
AN ACT TO AMEND THE FINANCE ACT, NO. 25 OF 2003, THE FINANCE
ACT, NO. 11 OF 2004 AND THE FINANCE ACT, NO. 16 OF 1995; TO
PROVIDE FOR THEEXEMPTION OF CERTAIN ENTERPRISES ENGAGED IN
CERTAIN ACTIVITIES FROM THE APPLICATION OF THE PROVISIONS OF
THE CUSTOMS ORDINANCE (CHAPTER 235), THE EXCHANGE
CONTROL ACT (CHAPTER 423) AND THE IMPORTS AND EXPORTS
(CONTROL) ACT, NO. 1 OF 1969; AND TO PROVIDE FOR MATTERS
CONNECTED THEREWITH AND INCIDENTAL THERETO.
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:-
1. This Act may be cited as the Finance Act, No. 12 of Short title.
2012.
PART I
AMENDMENT OF PART IIAOF THE FINANCE
ACT, NO. 25 OF 2003
2. Part IIA ( The Levy on Rooms of Five Star Hotels) of Amendment of
section 13A of
the Finance Act No. 25 of 2003 (hereinafter in this Part of
Part IIA of Act,
this Act referred to as the “principal enactment”) is hereby No. 25 of 2003.
amended in subsection (1) of section 13A by the substitution
for the words “United States Dollars One Hundred and
Twenty Five.” of the following words:-
“United States Dollars One Hundred and Twenty Five:
Provided however, no such levy shall be required
to be paid by any “Five Star Hotel” referred to above,
in respect of any room provided to any member of an
Airline Crew to whom the concessionary rates specified
by such Price Regulation Order applies.”.
2—PL 006668—6,615 (03/2012)
2 Finance Act, No. 12 of 2012
Indemnity. 3. Where the Levy on Rooms of Five Star Hotels has
been charged by the Chairman of Sri Lanka Tourism
Development Authority or any other person authorized in
that behalf by the guidelines issued under subsection (3) of
section 13A of the principal enactment in respect of any
room provided to any member of an Airline Crew under
concessionary rates, during the period commencing from
April 1, 2011 and upto the date of the coming into operation
of this Act , such person shall be deemed to have acted with
due authority and such collection shall be deemed for all
purposes to have been, and to be validly made and such
Chairman or person is hereby indemnified against all actions,
civil or criminal in respect of such collection.
PART II
REPEAL OF PART IIIA OF THE FINANCE
ACT, NO. 11 OF 2004
Repeal of Part 4. Part IIIA ( Imposition of Withholding Tax on the
IIIA of Act No. Registration of Motor Vehicles) of the Finance Act, No. 11
11 of 2004.
of 2004 (hereinafter in this Part of this Act referred to as the
“principal enactment”) is hereby repealed, with effect from
November 24, 2011.
Savings. 5. (1) The provisions of the principal enactment shall
notwithstanding the repeal of Part IIIA thereof , in respect of
the matters set out in subsection (2) , be in operation for such
period as may be required for the recovery of any sum due
under repealed Part IIIA.
(2) Notwithstanding the repeal of Part IIIA of the principal
enactment with effect from November 24, 2011, the
Commissioner of Motor Traffic is hereby empowered to
recover all sums due as Withholding Tax on the Registration
of Motor Vehicles on the day immediately preceding
November 24, 2011, and transmit all sums so recovered by
him as the Withholding Tax to the Commissioner-General
in terms of the provisions of section 28c of the repealed
Part IIIA.
Finance Act, No. 12 of 2012 3
PART III
AMENDMENT OF PART II OF THE FINANCE
ACT, NO. 16 OF 1995
6. Section 3 of the Finance Act, No.16 of 1995 (hereinafter Replacement of
in this Part of this Act, referred to as the “principal enactment”) section 3 of Act,
is hereby repealed and the following section substituted No.16 of 1995.
therefor:-
“Annual 3. (1) There shall be charged, levied and
luxury motor paid, on every luxury motor vehicle (other than
vehicle levy.
a semi-luxury dual purpose motor vehicle or a
wagon)-
(a) where the first year of registration falls
prior to January 1, 2011, for every year
commencing on or after April 1, 1995,
but for a period not more than seven
years ending prior to April 1, 2011, at
the respective rates set out in Part I of
the First Schedule to this Act;
(b) where the first year of registration or
the payment due date of any year, falls
within the period commencing on
January 1, 2011 and ending prior to
November 22, 2011, at the respective
rates set out in Part II of the First
Schedule to this Act; and
(c) where the first year of registration or
the payment due date of any year, falls
after November 22, 2011, for a period
not more than seven years from such
date, at the respective rates set out in
Part III of the First Schedule to this Act,
a luxury motor vehicle levy. The levy payable
for every such year shall be paid by the
registered owner of the luxury motor vehicle
on or before the relevant date:
4 Finance Act, No. 12 of 2012
Provided however, where any part of
the period of seven years referred to in
paragraph (a) above, continues after
January 1, 2011 the luxury motor
vehicle levy payable on or after
November 22, 2011, in respect of such
period shall be paid at the respective
rates set out in Part III of the First
Schedule to this Act:
Provided further , such luxury motor
vehicle levy shall not be charged in
respect of any luxury motor vehicle
owned by –
(a) an organization or an individual
to whom the provisions of
Diplomatic Privileges Act, No. 9
of 1996 is applicable; or
(b) a Department or a Ministry of the
Government or of a Provincial
Council .
(2) For the purposes of this section, the
“Provincial Council” means a Provincial
Council established under Chapter XVIIA of
the Constitution.”.
Replacement of 7. Section 4 of the principal enactment is hereby
section 4 of the repealed and the following section substituted therefor :—
principal
enactment.
“Annual 4. (1) There shall be charged, levied and
semi-luxury paid, on every semi-luxury motor vehicle (other
motor
than a semi-luxury dual purpose motor vehicle
vehicle levy.
or a wagon) –
(a) where the first year of registration falls
prior to January 1, 2011, for every year
commencing on or after April 1, 1995,
Finance Act, No. 12 of 2012 5
but for a period not more than seven
years ending prior to April 1, 2011, at
the respective rates set out in Part I of
the Second Schedule to this Act;
(b) where the first year of registration or the
payment due date of any year falls within
the period commencing on January 1,
2011 and ending prior to November 22,
2011, at the respective rates set out in
Part II of the Second Schedule to this
Act; and
(c) where the first year of registration or the
payment due date of any year, falls after
November 22, 2011, for a period not
more than seven years from such date, at
the respective rates set out in Part III of
the Second Schedule to this Act,
a semi-luxury motor vehicle levy. The levy
payable for every such year shall be paid by
the registered owner of the semi-luxury motor
vehicle on or before the relevant date :
Provided however, where any part of the
period of seven years referred to in paragraph
(a) above, continues after January 1, 2011
the semi-luxury motor vehicle levy payable
on or after November 22, 2011, in respect of
such period shall be paid at the respective
rates set out in Part III of the Second Schedule
to this Act:
Provided further, such semi-luxury motor
vehicle levy shall not be charged in respect
of any semi-luxury motor vehicle owned
by–
(a) an organization or an individual to
whom the provisions of Diplomatic
Privileges Act, No. 9 of 1996 is
applicable; or
6 Finance Act, No. 12 of 2012
(b) a Department or a Ministry of the
Government or of a Provincial
Council.
(2) For the purposes of this section, the
“Provincial Council” means a Provincial
Council established under Chapter XVIIA of
the Constitution.”.
Replacement of 8. Section 5 of the principal enactment is hereby
section 5 of the repealed and the following section substituted therefor :-
principal
enactment. “Annual 5. (1) There shall be charged, levied and
semi-luxury paid, on every semi-luxury dual purpose motor
dual purpose vehicle (other than a wagon) –
motor
vehicle levy.
(a) where the first year of registration falls
prior to January 1, 2011, for every year
commencing on or after April 1, 1995,
but for a period not more than seven
years ending prior to April 1, 2011, at
the respective rates set out in Part I of
the Third Schedule to this Act;
(b) where the first year of registration or
the payment due date of any year falls
within the period commencing on
January 1, 2011 and ending prior to
November 22, 2011, at the respective
rates set out in Part II of the Third
Schedule to this Act; and
(c) where the first year of registration or
the payment due date of any year, falls
after November 22, 2011, for a period
not more than seven years from such
date, at the respective rates set out in
Part III of the Third Schedule to this
Act,
a semi-luxury dual purpose motor vehicle levy.
The levy payable for every such year shall be
paid by the registered owner of the semi-luxury
dual purpose motor vehicle on or before the
relevant date :
Finance Act, No. 12 of 2012 7
Provided however, where any part of the
period of seven years referred to in paragraph
(a) above, continues after January 1, 2011 the
semi-luxury dual purpose motor vehicle levy
payable on or after November 22, 2011, in
respect of such period shall be paid at the
respective rates set out in Part III of the Third
Schedule to this Act:
Provided further, such semi-luxury dual
purpose motor vehicle levy shall not be
charged in respect of any semi-luxury dual
purpose motor vehicle owned by –
(a) an organization or an individual to
whom the provisions of Diplomatic
Privileges Act, No. 9 of 1996 is
applicable; or
(b) a Department or a Ministry of the
Government or of a Provincial Council.
(2) For the purposes of this section, the
“Provincial Council” means a Provincial
Council established under Chapter XVIIA of
the Constitution.” .
9. The following new section is hereby inserted Insertion of new
immediately after section 5 of the principal enactment and section 5A in the
principal
shall have effect as section 5A of that enactment:-
enactment.
“Amendment 5A. (1) The Parliament may by Resolution
of rates of amend the rates of the –
luxury , semi
luxury and
(a) luxury motor vehicle Levy, set out in
semi- luxury
dual purpose Part I, Part II and Part III of the First
motor Schedule hereto;
vehicle levies
by (b) semi-luxury motor vehicle Levy, set out
Resolution of in Part I, Part II and Part III of the Second
Parliament.
Schedule hereto;
8 Finance Act, No. 12 of 2012
(c) semi-luxury dual purpose motor
vehicle Levy, set out in Part I, Part II
and Part III of the Third Schedule
hereto,
by increasing or decreasing the amount
payable as levy.
(2) Upon the resolution seeking to amend
the rates, being approved by the Parliament in
accordance with the Standing Orders of the
Parliament, the Secretary to the Ministry of the
Minster shall publish a Notification in the
Gazette setting out the rates as amended.”.
Amendment of 10. Section 10 of the principal enactment is hereby
section 10 of the amended in subsection (2) thereof , by the substitution for
principal
the words “ a penalty of an amount equal to fifty per centum
enactment.
of the levy.” of the following words :-
“a penalty of an amount equal to fifty per centum of
the levy :
Provided however, if the amount so defaulted is
paid by the registered owner of a specified motor
vehicle before the expiry of sixty days from the relevant
date or the end of the year in respect of which the levy
is payable, whichever is earlier, such penalty shall not
be charged from such registered owner.” .
Amendment of 11. First Schedule to the principal enactment is hereby
the First amended:–
Schedule to the
principal
enactment. (1) by the repeal of the Heading to Part II of that
Schedule and the substitution therefor of the
following :-
“For any year, where the first year of registration or
the payment due date falls within the period commencing
on January 1, 2011 and ending prior to November 22,
2011:—”;

Finance Act, No. 12 of 2012 9
(2) by the repeal the example to Part II thereof and the
substitution therefor of the following:-
“EXAMPLE
(a) A luxury motor vehicle is registered on August 1,
2007, the levy applicable on such luxury motor
vehicle for the year commencing on April 1, 2010
(which is the third year succeeding the year of
registration) is Rs. 35,000.
(b) A luxury motor vehicle is registered on August 1,
2011, the levy applicable on such luxury motor
vehicle for that year (which is the year of
registration) is Rs. 100,000.
(c) A luxury motor vehicle is registered on August 1,
2012, the levy applicable on such luxury motor
vehicle for the year commencing on April 1, 2013
(which is the first year succeeding the year of
registration) is Rs. 100,000.”;
(3) by the addition immediately affter Part II of the
First Schedule of the following Part :–
“PART III
For any year ending/commencing on or after November 22, 2011,
in respect of which Part I and Part II of this Schedule is not
applicable:-
Year Rate
Rs.
1 For the year in which such luxury motor
vehicle is registered (being a year
commencing on or after November
22, 2011) 150,000

10 Finance Act, No. 12 of 2012
Year Rate
Rs.
2 For the first year succeeding the year in
which such luxury motor vehicle is registered 100,000
3 For the second year succeeding the year in
which such luxury motor vehicle is registered 75,000
4 For the third year succeeding the year in
which such luxury motor vehicle is registered 60,000
5 For the fourth year succeeding the year in
which such luxury motor vehicle is registered 50,000
6 For the fifth year succeeding the year in
which such luxury motor vehicle is registered 40,000
7 For the sixth year succeeding the year in
which such luxury motor vehicle is registered 30,000
8 For the seventh year succeeding the year in
which such luxury motor vehicle is registered Nil”.
Amendment of 12. Second Schedule to the principal enactment is
the Second hereby amended: –
Schedule to the
principal
enactment. (1) by the repeal of the Heading to Part II of that
Schedule and the substitution therefor of the
following :-
“For any year, where the first year of registration or
the payment due date falls within the period commencing
on January 1, 2011 ending prior to November 22,
2011:-”;
(2) by the additionimediately after Part II of the Second
Schedule of the following Part:-
“PART – III
For any year ending/commencing on or after November 22,
2011, in respect of which Part I and Part II of this Schedule is not
applicable:-

Finance Act, No. 12 of 2012 11
Year Rate
Rs.
1 For the year in which such semi-luxury motor
vehicle is registered (being a year commencing
on or after November 22, 2011) 60,000
2 For the first year succeeding the year in which
such semi-luxury motor vehicle is registered 50,000
3 For the second year succeeding the year in which
such semi-luxury motor vehicle is registered 40,000
4 For the third year succeeding the year in which
such semi-luxury motor vehicle is registered 30,000
5 For the fourth year succeeding the year in which
such semi-luxury motor vehicle is registered 25,000
6 For the fifth year succeeding the year in which
such semi-luxury motor vehicle is registered 20,000
7 For the sixth year succeeding the year in which
such semi-luxury motor vehicle is registered 15,000
8 For the seventh year succeeding the year in which
such semi-luxury motor vehicle is registered Nil”.
13. Third Schedule to the principal enactment is hereby Amendment of
amended – the Third
Schedule to the
principal
(1) by the repeal of the Heading to Part II of that enactment.
Schedule and the substitution therefor of the
following :-
“For any year, where the first year of registration or
the payment due date falls within the period commencing
on January 1, 2011 ending prior to November 22,
2011:-” ;
(2) by the addition immediately affter Part II of the
Third Schedule of the following Part:-

12 Finance Act, No. 12 of 2012
“PART – III
For any year ending/commencing on or after November 22, 2011,
in respect of which Part I and Part II of this Schedule is not
applicable:-
Year Rate
Rs.
1 For the year in which such semi-luxury dual
purpose motor vehicle is registered (being a year
commencing on or after November 22, 2011) 40,000
2 For the first year succeeding the year in which
such semi-luxury dual purpose motor vehicle is
registered 25,000
3 For the second year succeeding the year in which
such semi-luxury dual purpose motor vehicle is
registered 20,000
4 For the third year succeeding the year in which
such semi-luxury dual purpose motor vehicle is
registered 12,000
5 For the fourth year succeeding the year in which such
semi-luxury dual purpose motor vehicle is registered 10,000
6 For the fifth year succeeding the year in which such
semi-luxury dual purpose motor vehicle is registered 8,000
7 For the sixth year succeeding the year in which such
semi-luxury dual purpose motor vehicle is registered 6,000
8 For the seventh year succeeding the year in which such
semi-luxury dual purpose motor vehicle is registered Nil”.
Retrospective 14. The amendments made to the principal enactment
effect. by this Part of this Act, shall be deemed for all purposes to
have come into effect on November 22, 2011.
Indemnity. 15. Where any person or body of persons collects the
levy as provided for in this Part of this Act, during the period
commencing from November 22, 2011 and upto the date of
the coming into operation of this Act, such collection shall
be deemed for all purposes to have been and to be, validly
made, and such person shall be deemed to have acted with
due authority and is hereby indemnified against all actions,
civil or criminal, in respect of such collection.
Finance Act, No. 12 of 2012 13
PART IV
EXEMPTION FROM APPLICATION OF THE PROVISIONS OF CUSTOMS
ORDINANCE (CHAPTER 235), EXCHANGE CONTROL ACT (CHAPTER 423)
AND THE IMPORTS AND EXPORTS (CONTROL) ACT, NO. 1 OF 1969
16. (1) Subject to the provisions of subsections (2) and Granting
(3), there shall be exempted from the application of the exemption to
certain
provisions of the Customs Ordinance (Chapter 235), any enterprises from
enterprise engaged in any one or more of the following application of
businesses within the meaning of an agreement entered into the provisions of
Chapter 235.
with the Board of Investment of Sri Lanka, established under
the Board of Investment of Sri Lanka Law, No. 4 of 1978: –
(a) entrepot trade in involving import, minor
processing and re- export;
(b) off-shore business where goods can be procured
from one country or manufactured in one country
and shipped to another country without bringing
the same into Sri Lanka;
(c) providing front end services to clients abroad;
(d) head quarters operations of leading buyers for
management of finance supply chain and billing
operations;
(e) logistic services such as bonded warehouse or multi-
country consolidation in Sri Lanka.
(2) Any enterprise referred to in subsection (1) which is
engaged in the physical importation of goods, wares or
merchandise for re- export–
(a) shall carry out such activities either in a Free Port
operated under the supervision of the Sri Lanka
14 Finance Act, No. 12 of 2012
Ports Authority established under the Sri Lanka Ports
Authority Law, No. 51 of 1979 or a Bonded Area
declared under the Board of Investment of Sri Lanka
Law, No. 4 of 1978 or the Customs Ordinance
(Chapter 235) ;
(b) the movement of goods to and from such Free Port
or the Bonded Area to and from the Sri Lankan
territory shall, notwithstanding the provisions of
subsection (1) be subject to the provisions of the
Customs Ordinance, as if such goods had been
imported into Sri Lanka or exported from Sri Lanka
as the case may be.
(3) Any enterprise referred to in subsection (1) which is
not engaged in the physical movement of goods, wares or
merchandise, may carry out such operations outside a Free
Port or a Bonded Area as referred to above.
Granting 17. (1) Subject to the provisions of subsections (2) and
exemption to (3), there shall be exempted from the application of the
certain provisions of the Exchange Control Act (Chapter 432), any
enterprises from
application of enterprise engaged in any one or more of the following
the provisions of businesses within the meaning of an agreement entered into
Chapter 423. with the Board of Investment of Sri Lanka, established under
the Board of Investment of Sri Lanka Law, No. 4 of 1978: –
(a) entrepot trade in involving import, minor
processing and re- export;
(b) off-shore business where goods can be procured
from one country or manufactured in one country
and shipped to another country without bringing
the same into Sri Lanka;
(c) providing front end services to clients abroad;
(d) head quarters operations of leading buyers for
management of finance supply chain and billing
operations;
Finance Act, No. 12 of 2012 15
(e) logistic services such as bonded warehouse or multi-
country consolidation in Sri Lanka.
(2) Any enterprise referred to in subsection (1) which is
engaged in the physical importation of goods, wares or
merchandise for re- export–
(a) shall carry out such activities either in a Free Port
operated under the supervision of the Sri Lanka
Ports Authority established under the Sri Lanka Ports
Authority Law, No. 51 of 1979 or a Bonded Area
declared under the Board of Investment of Sri Lanka
Law, No. 4 of 1978 or the Customs Ordinance
(Chapter 235) ;
(b) the movement of goods to and from such Free Port
or the Bonded Area to and from the Sri Lankan
territory shall, notwithstanding the provisions of
subsection (1) be subject to the provisions of the
Customs Ordinance, as if such goods had been
imported into Sri Lanka or exported from Sri Lanka
as the case may be.
(3) Any enterprise referred to in subsection (1) which is
not engaged in the physical movement of goods, wares or
merchandise, may carry out such operations outside a Free
Port or a Bonded Area as referred to above.
18. (1) Subject to the provisions of subsections (2) and Granting
(3), there shall be exempted from the application of the exemption to
certain
provisions of the Imports and Exports (Control) Act, No. 1 of
enterprises from
1969, any enterprise engaged in any one or more of the application of
following businesses within the meaning of an agreement the provisions of
entered into with the Board of Investment of Sri Lanka, Act, No. 1 of
1969.
established under the Board of Investment of Sri Lanka Law,
No. 4 of 1978:-
(a) entrepot trade in involving import, minor
processing and re- export;
16 Finance Act, No. 12 of 2012
(b) off-shore business where goods can be procured
from one country or manufactured in one country
and shipped to another country without bringing
the same into Sri Lanka;
(c) providing front end services to clients abroad;
(d) head quarters operations of leading buyers for
management of finance supply chain and billing
operations;
(e) logistic services such as bonded warehouse or
multi- country consolidation in Sri Lanka.
(2) Any enterprise referred to in subsection (1) which is
engaged in the physical importation of goods, wares or
merchandise for re- export–
(a) shall carry out such activities either in a Free Port
operated under the supervision of the Sri Lanka
Ports Authority established under the Sri Lanka Ports
Authority Law, No. 51 of 1979 or a Bonded Area
declared under the Board of Investment of Sri Lanka
Law, No. 4 of 1978 or the Customs Ordinance
(Chapter 235) ;
(b) the movement of goods to and from such Free Port
or the Bonded Area to and from the Sri Lankan
territory shall, notwithstanding the provisions of
subsection (1) be subject to the provisions of the
Customs Ordinance, as if such goods had been
imported into Sri Lanka or exported from Sri Lanka
as the case may be.
(3) Any enterprise referred to in subsection (1) which is
not engaged in the physical movement of goods, wares or
merchandise, may carry out such operations outside a Free
Port or a Bonded Area as referred to above.
Finance Act, No. 12 of 2012 17
19. The enterprises to which exemptions have been Enterprises are
granted in terms of sections 16, 17 and 18 shall :— required to
report
periodically.
(a) ensure the proper maintenance of documentation
in respect of inward and outward remittance of
foreign exchange and other transactions ;
(b) report on the inward and outward remittances of
foreign exchange annually or when directed to do
so by the Director-General of Customs, the
Controller of Exchange or the Controller of Imports
and Exports, as the case may be ; and
(c) include in such report all other details as are
specified by the Controller of Exchange and the
Director-General of Customs in consultation with
the Chairman of the Board of Investment of Sri
Lanka.
20. In the event of any inconsistency between the Sinhala text to
Sinhala and Tamil texts of this Act, the Sinhala text shall prevail in case
of inconsistency.
prevail.

18 Finance Act, No. 12 of 2012
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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