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Short title.
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1. This Act may be cited as the Inland Revenue (Amendment) Act, No. 31 of 1988.
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Amendment of section 8 of Act No. 28 of 1979.
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2. Section 8 of the Inland Revenue Act, No. 28 of 1979 (hereinafter referred to as the “principal enactment”) is hereby amended in paragraph (a) of that section as follows :
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(l)by the substitution, in sub-paragraph (iii) of that paragraph, for the words and figures ‘Surveyors’ Institute of Sri Lanka Act, No. 22 of 1982 ; and”, of the words and figures “Surveyors’ Institute of Sri Lanka Act, No. 22 of 1982 ;” ;
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(2) by the substitution, in sub-paragraph (iii) of that paragraph, for the words and figures “Institute of Chemistry (Ceylon) Act, No. 15 of 1972 of the words and figures ‘Institute of Chemistry (Ceylon) Act, No. 15 of 1972 ; and” ; and
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(3) by the addition, immediately after sub-paragraph (Liii) of that paragraph, of the following sub-paragraph :
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” (Liv) the Sri Lanka Institute of Development Administration established by the Sri Lanka institute of Development Administration Act, No. 9 of 1982.”.
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Amendment of section 33 of the principal enactment.
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3. Section 33 of the principal enactment is hereby amended in paragraph (b) of subsection (2) of that section as follows :
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(1) by the substitution, in sub-paragraph (iii) of that paragraph, for the words and figures November 15, 1978, and”, of the word and figures “November 15 1978”;
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(2) by the substitution, in sub-paragraph (iv) of that paragraph, for the words “existing company;’, of the words “existing company; and” ; and
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(3) by the addition, immediately after sub-paragraph (iv) of that paragraph, of the following new subparagraph :
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“(v) the taxable income of which for any year of assessment commencing on or after April 1, 1988, does not exceed three hundred and thirty-three thousand three hundred and thirty three-rupees.”.
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Insertion of new sections 33A, 33B, 33C and 33D in the principal enactment.
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4. The following sections are hereby inserted immediately after section 33 of the principal enactment and shall have effect as sections 33A. 33B, 33C and 33D of that enactment.
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“Advance company tax on qualifying distributing to which resident companies are liable.
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33A.
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(1) Every company resident in Sri Lanka shall be liable to pay for every year of assessment commencing on or after April 1, 1988, a tax (hereinafter referred to as the ” advance company tax “) calculated at the appropriate rate specified in the Seventh Schedule to this Act as the rate applicable to companies of that class, on an amount equal to the amount of every qualifying distribution made by that company during that year of assessment.
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(2) Every resident company shall be entitled to deduct, in accordance with the provisions of section 125(2) (iv), from the tax payable by it under section 33(1) (a) of this Act for any year of assessment commencing on or after April 1, 1988, the advance company tax paid by it in that year of assessment. Such deduction shall not exceed 50 per centum of the tax payable under section 33 (1) (a) by that company in that year of assessment.
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(3) The advance company tax paid by a company in any year of assessment which is in excess of the amount deducted for that year of assessment under subsection (2) shall not be refunded to the company but shall be carried forward and deducted, in accordance with the provisions of section 125(2) (iv) from the tax payable under section 33(1) (a) by that company for the next succeeding year of assessment and so on, so however, that the total amount deducted on account of advance company tax from the tax payable by that company under section 33(1) (a) for any year of assessment shall not exceed 50 per centum of the tax payable under section 33 (1) (a) by that company for that year of assessment.
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Dividend consisting of any qualifying distribution when received by a resident person other than a company.
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33B.
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(1) Where a resident person, other than a company, receives in any year of assessment, a dividend in relation to which advance company tax under subsection (1) of section 33A has been paid by any resident company, the statutory income of such per- son from such dividend for that year of assessment shall be deemed to be a sum equal to the aggregate of the gross dividend and the advance company tax which is attributable to such part of that dividend as consists of a qualifying distribution.
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(2) Every resident person, other than a company, whose total statutory income for any year of assessment includes a dividend in relation to which advance company tax under subsection (1) of section 33A has been paid by any resident company, shall be entitled to deduct from the tax payable by such person for that year of assessment, a sum equal to the advance company tax paid on such part of that dividend as consists of a qualifying distribution. Where the amount to be so deducted exceeds the tax payable by him for that year of assessment, the excess shall, subject to the provisions of Chapter XXIII, be refunded to such person.
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Resident company to maintain a record of dividends received.
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33c. Every resident company ‘shall maintain for every year of assessment commencing on or after April 1, 1988, a record indicating-
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(1) dividends in the form of money or of an order to pay money from other resident companies received on or after April 1, 1988, classified under the following categories and sub-categories:
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(b) dividends in relation to which advance company tax has not been paid ;
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(c) other dividends
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(i) dividends paid out of profits for any period prior to April 1, 1988,
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(ii) dividends in relation to which, advance company tax has been paid at 50 per centum,
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(iii) dividends in relation to which advance company tax has been paid at 33 1/3 per centum, and
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(iv) dividends in relation to which advance company tax has been paid at 25 per centum. ;
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(2) profits and income, other than dividend income, arising or accruing on or after April 1, 1988, classified under the following categories :
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(a) exempt profits and income ;
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(b) profits and income taxable at rates other than those specified in the Second Schedule to this Act ; and
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(c) other profits and income ;
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(3) details of dividends paid out during that year of assessment, out of each of the categories and subcategories of income set out in the foregoing paragraphs;
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(4) appropriations made during that year of assessment out of each of the categories and subcategories of income set out in the foregoing paragraphs, for payment of taxes and reserves.
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Amendment of section 38 of the principal enactment.
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5. Section 38 of the principal enactment is hereby amended as follows:
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(1) in subsection (2) of that section
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(i) by the substitution for paragraph (d) of that subsection of the following paragraph:
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” (d) the composition Of the gross dividend indicating separately the amount paid out of
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(i) exempt dividends received ;
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(ii) dividends received, in relation to which advance company tax has been paid at 50 per centum;
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(iii) dividends received in relation to which advance company tax has been paid at 33 1/3 par centum;
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(iv) dividends received, in relation to which advance company tax has been paid at 25 per centum ;
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(v) other dividends received;
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(vi) income exempt from income tax;
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(vii) profits and income taxable at rates other than those specified in the Second Schedule to this Act; and
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(viii) other profits and income;”; and
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(ii) by the addition, immediately after paragraph (d) of that subsection of the following new paragraphs:
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” (e) the advance company tax paid in relation to such part of the dividend paid out of the other profits and income referred to in sub-paragraph (viii) of the foregoing paragraph as consists of a qualifying distribution;
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(f) advance company tax paid to relation to such part of the dividend paid out of a dividend referred to in sub-paragraph (ii) or (iii) or (iv) of paragraph (d) as consists of a qualifying distribution. ” ; and
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(2) by the insertion, immediately after subsection (2) of that section of the following new subsection :
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” (2A) Every company resident in Sri Lanka shall, for every year of assessment commencing on or after April 1, 1988, furnish to the Commissioner-General on or before the thirtieth day of November immediately succeeding the end of that year of assessment, a statement in such form as may be specified by the Commissioner-General setting out the particulars of
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(i) advance company tax paid in that year of assessment;
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(ii) any payments made in that year of assessment in respect of tax under section 33 (1) (a) for any year of assessment commencing on or after April 1, 1988. “; and
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(3) in subsection (4) of that section by the substitution for the words ” the amount of tax shown on such statement.”, of the words ” the amount of tax including the advance company tax, shown on such statement.”.
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Amendment of section 97 of the principal enactment.
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6. Section 97 of the principal enactment is hereby amended by the addition, immediately after subsection (3), of that section of the following new subsection :
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” (4) Notwithstanding the provisions of any of the foregoing subsections, the entirety of the advance company tax payable by any company resident in Sri Lanka, under section 33A (1) on an amount equal to the amount of every qualifying distribution made by such company in any year of assessment commencing on or after April 1, 1988, shall be remitted to the Commissioner-General at the time at which the dividend consisting of each such qualifying distribution is distributed. The remittance shall be accompanied by a declaration in such form and containing such particulars as may be specified by the Commissioner-General to ensure the orderly collection of such tax.
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For the purposes of this subsection the expression ” the time at which the dividend consisting of each such qualifying distribution is distributed ” means the date on which the dividend is declared or where the dividend is declared to be paid on a future date, such future date.”.
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Amendment of section 117 of the principal enactment.
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7. Section 117 of the principal enactment is hereby amended in subsection (12) of that section, by the substitution of section , for the words and figures ” on or after April 1, 1987, shall be agreed to, or determined,”, of the words and figures, “on or after April 1, 1987, shall be agreed to, or determined by the Commissioner-General,”.
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Amendment section 125 of the principal enactment.
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8. Section 125 of the principal enactment is hereby amended as follows:
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(1) in subsection (1A) of that section by the substitution for the words and figures “specified in section 97 (3),”, of the words and figures ” specified for the payment of that tax in section 97 (3) or section 97(4),”;
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(2) in subsection (2) of that section, by the addition, immediately after paragraph (iii) of the proviso to that subsection, of the following paragraph:
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” (iv) for any year of assessment commencing on or after April 1, 1989, any excess of advance company tax paid by a company and carried forward in accordance with the provisions of subsection (3) of section 33A, from the year immediately preceding that year of assessment may be deducted, to the extent it can be deducted, first from the quarterly installment payable on or before the fifteenth day of August in that year of assessment and the balance, if any, of such excess, from the next quarterly installment payable on or before the fifteenth day of November in that year of assessment and so on, and the amount so deducted shall, for the purposes of this paragraph, be deemed to have been paid on the fifteenth day of August, or the fifteenth day of November and so on, as the case may be. “; and
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(3) in subsection (11) of that section, by the substitution for the words ” any year of assessment.”, of the words ” any year of assessment, the advance company tax payable for any year of assessment by a company in relation to any qualifying distribution.”.
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Amendment of section 126 of the principal enactment.
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9. Section 128 of the principal enactment is hereby amended by the addition, immediately after paragraph (c) of that section of the following new paragraph;
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“(d) any advance company tax which a company is required to pay under this Act,”.
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Amendment of section 151 of the principal enactment.
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10. Section 151 of the principal enactment is hereby amended in paragraph (d) of subsection (1) of that section by the substitution, for the words and figures “requirements of section 60 (3) “, of the words and figures “requirements of section 33c or section 60 (3) “.
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Amendment of section 158 of the principal enactment.
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11. Section 158 of the principal enactment is hereby amended by the addition, immediately after subsection (11) of that section, of the following new subsection :
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” (12) Nothing in the preceding provisions of this section shall be read or construed as empowering the Minister or the Secretary to the Ministry of the Minister to have access to, or to examine, any records or documents relating to the affairs of any person, in the possession, custody or control of the Commissioner-General.”.
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Amendment of section 163 of the principal enactment.
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12. Section 163 of the principal enactment is hereby amended by the insertion, immediately after the definition of ” property ‘, of the following definition :
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‘” qualifying distribution ” means the whole or part of any gross dividend distributed in any year of assessment commencing on or after April 1, 1988, by a resident company to a shareholder, in the form of money or of an order to pay money, out of such profits of the company which, if taxable for that year of assessment, would be taxed at the appropriate rate specified in the Second Schedule to this Act, as the rate applicable to companies of that class, but does, not include any dividend distributed out of
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(i) profits or income which accrued, or arose, to such company, prior to April 1,1988 ;
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(ii) its exempt income ; and
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(iii) any income from dividends received by such company.’.
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Amendment of the Second Schedule of the principal enactment
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13. The Second Schedule to the principal enactment is hereby amended as follows:
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(1) in Part II of that Schedule, by the substitution, for the words and figures ” April 1,1979.”, of the words and figures ” April 1, 1979, but ending on or before March 31, 1988.”;
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(2) in Part III of that Schedule, by the substitution, for the words and figures ” April 1, 1979 “, of the words and figures “April 1, 1979, but ending on or before March 31, 1988,”;
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(3) by the substitution, in paragraph (b) of Part IV of that Schedule for the word and figures ” April 1, 1982 “, of the words and figures ” April 1,1982, but ending on or before March 31, 1988 ” ; and
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(4) by the insertion, immediately after Part IV of that Schedule, of the following new Part:
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The rate of income tax for every year of assessment commencing on or after April 1, 1988
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(1) if the taxable income of the company does not exceed two hundred and fifty thousand rupees 33 1/3,
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(2) if the taxable income of the company exceeds two hundred and fifty thousand rupees but does not exceed three hundred and thirty-three thousand three hundred and thirty-three rupees, the tax shall be the aggregate of
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(i) a sum equal to 33 1/3 per centum of two hundred and fifty thousand rupees, and
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(ii) the amount by which the taxable income of the company for that year of assessment exceeds two hundred and fifty thousand rupees.'”.
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Addition of new Schedule to the principal enactment.
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14. The following new Schedule is hereby added immediately after the Sixth Schedule to the principal enactment and shall have effect as the Seventh Schedule to that enactment.
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(SECTION 33A (1) The rates of advance company tax for every year of assessment commencing on or after April 1, 1988, shall be as follows:
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(i) on the amount equal to the amount of every qualifying distribution made by a small company. 25 per centum
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(ii) on the amount equal to the amount of every qualifying distribution made by a quoted public company or a people’s company, or a people’s company. .. 33 1/3 per centum
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(iii) on the amount equal to the amount of every qualifying distribution made by a company other than a small company, or a quoted public company, or a people’s company.
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