9of2015.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
INLAND REVENUE (AMENDMENT)
ACT, No. 9 OF 2015
[Certified on 30th October, 2015]
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 October 30, 2015
PRINTEDATTHE DEPARTMENTOFGOVERNMENTPRINTING,SRILANKA
TO BEPURCHASED AT THE GOVERNMENT PUBLICATIONS BUREAU, COLOMBO 5
Price : Rs. 42.00 Postage : Rs. 50.00

Inland Revenue (Amendment) 1
Act, No. 9 of 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 Socialist
Republic of Sri Lanka as follows :-
1. This Act may be cited as the Inland Revenue Short title and
(Amendment) Act, No. 9 of 2015, and shall be deemed for all the date of
operation.
purposes to have come into operation on April 1, 2015 unless
stated otherwise.
2. Section 7 of the Inland Revenue Act, No. 10 of 2006 Amendment of
(hereinafter referred to as the “principal enactment”) as last section 7 of the
Inland Revenue
amended by Act, No.8 of 2014 is hereby further amended in Act, No. 10 of
paragraph (b) of that section as follows:- 2006.
(1) by the substitution in sub-paragraph (xvii) of that
paragraph for the words and figures “on or before
March 31, 2008 or for any year of assessment
commencing on or after April 1, 2013, arising out of
business”, of the words and figures “on or before
March 31, 2008, arising out of business”;
(2) by the substitution in sub-paragraph (lxxii) of that
paragraph for the words and figures “Act, No. 12 of
1986; and”, of the words and figures “Act, No. 12 of
1986;”;
(3) by the substitution in sub-paragraph (lxxiii) of that
paragraph for the words and figures “Trust
Ordinance (Chapter 87).”, of the words and figures
“Trust Ordinance (Chapter 87); and” ; and
2—PL 009232—2,950 (09/2015)
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 Lanka
incorporated by the Diabetes Association of
Sri Lanka (Incorporation) Act, No. 1 of 1992.” .
Amendment of 3. Section 8 of the principal enactment as last amended
section 8 of the by Act, No. 8 of 2014 is hereby further amended in subsection
principal (1) of that section as follows:-
enactment.
(1) by the substitution in paragraph (x) of that
subsection for the words “for that year of
assessment.”, of the words “for that year of
assessment; and”; and
(2) by the addition immediately after paragraph (x) of
that subsection, of the following new paragraph:-
“(y) benefit from provision of any loan by the
employer free of interest or at a subsidised
rate of interest, if such loan is provided not
out of funds borrowed for that purpose. ” .
Amendment of 4. Section 9 of the principal enactment as last amended
section 9 of the by Act, No. 8 of 2014 is hereby further amended as follows:–
principal
enactment.
(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 any
individual”, of the words and figures “ commencing
on or after April 1, 2011, but prior to January 1, 2015,
to any individual”;
(2) by the addition immediately after paragraph (h) of
that section, of the following new paragraphs:-
“(hh) such part of any interest accruing for, or
arising in, for the period commencing on
January 1, 2015 and ending on March 31,
Inland Revenue (Amendment) 3
Act, No. 9 of 2015
2015, or for any year of assessment
commencing on or after April 1, 2015 to any
individual who is a citizen of Sri Lanka and
resident in Sri Lanka and who is sixty years
or more or reaching sixty years during the
period commencing from January 1, 2015
and ending on March 31, 2015 or who is
more than fifty nine years old on the first
day of the year of assessment commencing
on or after April 1, 2015, from any deposit
maintained in any bank or financial
institution authorized by the Central Bank
of Sri Lanka to accept deposits from the
general public or any registered society
within the meaning of the Co-operative
Societies Law, No. 5 of 1972;
(hhh) such part of any interest accruing for, or
arising in, any year of assessment
commencing on or after April 1, 2015, to
any individual or charitable institution
where such individual or charitable
institution maintains one savings account
or more than one savings account, where
the interest paid for a month is less than
five thousand rupees.
For the purpose of this paragraph,
“savings account” means an account,
whether or not subject to any condition
affecting the right to withdraw money
therefrom and which bears interest at a rate
not dependent on the period for which the
deposit is maintained;”; and
(3) by the addition immediately after paragraph (o) of
that section , of the following new paragraphs:-
“(p) the interest or discount accruing or arising
to any person from any investment made
4 Inland Revenue (Amendment)
Act, No. 9 of 2015
on or after January 1, 2015 in any
Corporate Debt Security, issued by the
Urban Development Authority
established by the Urban Development
Authority Law, No. 41 of 1978; and
(q) the interest accruing or arising to any
individual who is Sri Lankan, living or
employed abroad from any investment
made on or after January 1, 2015 in Nation
Development Bonds issued by the Central
Bank of Sri Lanka on behalf of the
Government.”.
Amendment of 5. Section 10 of the principal enactment as last amended
section 10 of by Act, No. 8 of 2014 is hereby further amended in subsection
the principal
enactment. (1) of that section as follows:-
(1) by the substitution in paragraph (l) of that
subsection for the words “the second mentioned
dividend by that company.”, of the words “the
second mentioned dividend by that company;” and
(2) by the addition immediately after paragraph (l) of
that subsection, of the following new paragraph:-
“(m) any dividend paid to a shareholder of any
new undertaking commenced on or after
April 1, 2015 for manufacture of products
for export, and which is not formed by
splitting-up or re-construction of an
existing undertaking with an investment
of not less than two million US Dollars
(or equivalent in any other currency) and
for which depreciation allowances are
entitled to under paragraph (h) of the first
proviso to paragraph (a) of subsection
(1) of section 25, where such dividends
Inland Revenue (Amendment) 5
Act, No. 9 of 2015
are paid out of such profits and income
of such new undertaking during the
period reckoned from the year of
assessment in which such new
undertaking commences to carry on
commercial operations and another four
years of assessment immediately
succeeding that year of assessment.”.
6. Section 13 of the principal enactment as last amended Amendment of
by Act, No. 8 of 2014 is hereby further amended as follows:- section 13 of
the principal
enactment.
(1) by the insertion immediately after paragraph ( qqqq)
of that section, of the following new paragraph:–
“(qqqqq) one half of the profits and income for
any period on or after April 1, 2015
from the production of films or dramas
of any individual who produces an
award winning cinema or a drama at an
international film or drama festival, for
a period of five years of assessment
commencing from the year in which
such award is received;” ;
(2) by the insertion immediately after paragraph ( tt) of
that section, of the following new paragraph:–
“ (ttt) the profits and income arising or
accruing to any Unit Trust from
investments made on or after January
1, 2015 in US Dollar deposits or US
Dollar denominated securities listed in
any foreign stock exchange;”; and
(3) by the insertion immediately after paragraph
(yyyyyyyy) of that section, of the following new
paragraph:-
“(yyyyyyyyy) the profits and income arising or
accruing to any company,
partnership or body of persons
6 Inland Revenue (Amendment)
Act, No. 9 of 2015
outside Sri Lanka for any year of
assessment commencing on or
after April 1, 2015, from any
payment made by way of royalty
as a specific requirement of any
information technology or
business process outsourcing
company in Sri Lanka, for the year
of assessment in which such
company in Sri Lanka commences
such operations and for another
year of assessment immediately
succeeding that year of
assessment;”.
Amendment of 7. Section 25 of the principal enactment as last amended
section 25 of
by Act, No. 8 of 2014 is hereby further amended as follows:–
the principal
enactment.
(1) in subsection (1) of that section-
(a) by the repeal of sub-paragraph (v) and sub-
paragraph (vi) of paragraph (a) of that
subsection, and the substitution therefor,
of the following sub- paragraph:–
“(v) any qualified building constructed
or any unit of a condominium
property acquired and which is
approved by the Urban
Development Authority
established by the Urban
Development Authority Law,
No. 41 of 1978 and constructed to
be used as a commercial unit or any
hotel building (including a hotel
Inland Revenue (Amendment) 7
Act, No. 9 of 2015
building complex) or any industrial
building (including any industrial
building complex) acquired from a
person who had used such building
in any trade or business-
(A) prior to April 1, 2015 at the
rate of six and two third per
centum per annum, on the
cost of construction or cost
of acquisition of such
building or unit; or
(B) on or after April 1, 2015 at
the rate of ten per centum
per annum on the cost of
construction or the cost of
acquisition of such building
or unit;”;
(b) by the addition immediately after paragraph
(g) of the proviso to paragraph (a) of that
subsection, of the following new
paragraph:–
“(h) where any plant, machinery or
equipment acquired and used on
or after April 1, 2015, in any new
undertaking commenced on or
after April 1, 2015 for the
manufacture of products for
exports with an investment of not
less than two million US Dollars
or its equivalent in other currency
and which is not formed by
splitting up or re-construction of
an existing undertaking, the rate
of depreciation shall be hundred
per centum of the cost of
acquisition;”;
8 Inland Revenue (Amendment)
Act, No. 9 of 2015
(c) in the second proviso to paragraph (a) of
that subsection, by the substitution for the
words and figures “referred to in sub-
paragraphs (i), (ii), (iii), or (iv)”, of the words
and figures “referred to in sub-paragraph
(i), (ii), (iii), (iv) or (v)”;
(d) in the proviso to paragraph (i) of that
subsection, by the insertion immediately
after paragraph (B) of that proviso, of the
following new paragraph:–
“(C) where such expenditure on
research is incurred on or after
April 1, 2015 , for any innovation
or research relating to high value
agricultural products and such
research is carried out by such
person himself or through any
research institution, in Sri Lanka”;
(e) by the insertion immediately after
paragraph (i) of that subsection, of the
following paragraph:–
“For the purpose of this paragraph the
Commissioner-General shall issue
guidelines in order to ensure the uniform
application of deduction;”;
(f) by the substitution in sub-paragraph (iv)
to the proviso to paragraph (k) of that
subsection for the words and figures
“under Chapter XIV or in the opinion”, of
the words and figures “under Chapter XIV
of this Act where such benefit is not exempt
under paragraph (s) of subsection (1) of
section 8 of this Act, or in the opinion”;
Inland Revenue (Amendment) 9
Act, No. 9 of 2015
(g) by the repeal of paragraph (w) of that
subsection and the substitution therefor,
of the following new paragraphs:-
“(w) for any year of assessment
commencing on or after April 1, 2014
any royalty or ground rent payable
for the relevant year of assessment
and paid by such person if such
amount was not allowed to be
deducted prior to April 1, 2014,
under paragraph (a) of subsection
(5) of section 32;
(x) for any year of assessment
commencing on or after April 1,
2015, an amount equal to three
hundred per centum of the
expenditure incurred by any person
registered with the Tertiary and
Vocational Education Commission
established under the Tertiary and
Vocational Educational Act, No. 20
of 1990 on standard skill
development training by any
institution recommended by such
Commission to be provided to
trainees;
(y) for any year of assessment
commencing on or after April 1,
2015, an amount equal to three
hundred per centum of the
expenditure incurred by any person
for brand promotion for the export
of products manufactured by such
persons.
For the purpose of this paragraph
“brand promotion” means, creating
an internationally recognized brand
name for a local value added
product or produce.”;
10 Inland Revenue (Amendment)
Act, No. 9 of 2015
(2) in subsection (5) of that section, by the insertion at
the end of the proviso to that subsection, of the
following 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 the
definition 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, articles
or equipment, including computer
software or intangible assets other than
goodwill,”;
(b) by the repeal of sub-paragraph (iii) of
paragraph (f) of that subsection, and the
substitution therefor, of the following
new sub-paragraph:-
“(iii) where a company is incorporated
(hereinafter referred to as the “first
mentioned company”) to –
(a) take over the business
(including the capital
assets) carried on by an
individual either solely or
in partnership with others,
and acquires the capital
assets of such business
being carried on by such
individual or partnership;
or
Inland Revenue (Amendment) 11
Act, No. 9 of 2015
(b) segregate the business of
long term insurance and
general insurance as
separate businesses as
required in terms of
Regulation of Insurance
Industry (Amendment)
Act, No. 3 of 2011 or to
consolidate, acquire or
merge of any bank,
financial institution or
leasing company under
the guidance of the
Central Bank of Sri Lanka
subject to conditions
specified in the Guidelines
issued by the
Commissioner General
where such businesses
are carried out separately
prior to such segregation,
consolidation, acquisition
or merger, by each such
company (hereinafter
referred to as the “second
mentioned company”),
the cost of acquisition of each
capital asset by the first
mentioned company shall be
deemed to be the cost of
acquisition of such capital asset
by such individual or
partnership or the second
mentioned company, reduced
by the amount of any allowance
for depreciation granted in
respect of such asset to such
12 Inland Revenue (Amendment)
Act, No. 9 of 2015
individual or partnership or
second mentioned company,
and the date of acquisition of
such capital assets by the first
mentioned company, shall be
deemed to be the date of
acquisition of such capital asset
by such individual, partnership
or second mentioned
company;”.
Amendment of 8. Section 26 of the principal enactment as last amended
section 26 of
by Act, No. 8 of 2014 is hereby further amended in subsection
the principal
enactment. (1) of that section as follows:-
(1) in paragraph (l) of that subsection:-
(a) by the substitution for the words and
figures in sub-paragraph (v) of that
paragraph “the Value Added Tax Act,
No. 14 of 2002; or” of the words and figures
“the Value Added Tax Act, No. 14 of 2002
and any Nation Building Tax on Financial
Services within the provisions of the Nation
Building 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 and
figures “ Act, No. 12 of 2013; or”; and
(c) by the insertion immediately after sub-
paragraph (vii) of that paragraph, of the
following new sub-paragraph:-
“(viii) Super Gain Tax, Bars and Taverns
Levy, Casino Industry Levy, Mobile
Telephone Operator Levy, Satellite
Inland Revenue (Amendment) 13
Act, No. 9 of 2015
Location Levy, Dedicated Sports
Channel Levy and Mansion Tax
imposed and levied under the
provisions of the Finance Act,
No. 10 of 2015,”; and
(2) by the repeal of paragraph (m) of that subsection
and substitution therefor, of the following new
paragraph:-
“(m) any ground rent or royalty payable for any
period prior to April 1, 2014 and paid after
April 1, 2014 which is deductible under
paragraph (a) of subsection (5) of section
32 or annuity paid by such person;”.
9. Section 32 of the principal enactment as last amended Amendment of
by Act, No. 8 of 2014 is hereby further amended in subsection section 32 of
(5) of that section as follows:- the principal
enactment.
(1) in paragraph (a) of that subsection, by the
substitution for all the words and figures from “sums
paid by such person” to the words and figures
“subsection (1) of section 26:”, of the following
words and figures:-
“sums paid by such person for any year of
assessment by way of:
(i) any ground rent or royalty payable for
any period prior to April 1, 2014 and which
is paid after April 1, 2014; or
(ii) annuity or interest,
which he is not entitled to deduct under
section 25.
For the purpose of this paragraph interest
does not include the excess referred to in
paragraph (x) or paragraph (y) of subsection
(1) of section 26:”; and
14 Inland Revenue (Amendment)
Act, No. 9 of 2015
(2) by the insertion immediately after paragraph (d) of
that subsection, of the following new paragraph:-
“(dd) the balance , if any, of any loss deductible
under the provisions of this Act , of any
business of any bank, financial institution
or leasing company which is consolidated,
acquired or merged in terms of the
guidelines issued by the Central Bank of
Sri Lanka subject to conditions specified
in the guidelines issued by the
Commissioner General, shall continue to be
deducted, if it would have been claimed
under this section prior to such
consolidation, acquisition or merger,
notwithstanding anything to the contrary
in any other provision of this Act, but
subject to the provisions of paragraph (b),
from the total statutory income of the
respective bank, financial institution or
leasing company as a result of such
consolidation, acquisition or merger;”.
Amendment of 10. Section 34 of the principal enactment as last
section 34 of amended by Act, No. 8 of 2014 is hereby further amended as
the principal
enactment. follows:-
(1) in subsection (2) of that section: –
(a) in paragraph (b) of that subsection, by
the addition immediately after sub-
paragraph (ix), of the following new sub-
paragraph:-
“(x) National Kidney Fund established
under the National Kidney
Foundation of Sri Lanka
(Incorporation) Act, No. 34 of 2006;”;
Inland Revenue (Amendment) 15
Act, No. 9 of 2015
(b) in the paragraph (s) of that subsection, by
the substitution for all the words and
figures from “investment of not less than”
to the words and figures “business on or
after April 1, 2011:”, of the words and
figures “investment of not less than fifty
million rupees in the acquisition of fixed
assets made by any person on or after
April 1, 2011 but before April 1, 2014 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:”;
(c) in paragraph (u) of that subsection, by the
substitution for all the words and figures
from “ after April 1, 2013, then-” to the words
“whichever is lower;”, of the following
words and figures:-
“after April 1, 2013, then-
(i) such part of profits in excess of
five hundred thousand rupees ;
or
(ii) for any year of assessment ended
prior to April 1, 2015, one hundred
thousand rupees and for any year
of assessment commencing on or
after April 1, 2015, two hundred
and fifty thousand rupees,
whichever is lower;”;
16 Inland Revenue (Amendment)
Act, No. 9 of 2015
(d) by the substitution for paragraph (v) of
that subsection, of the following new
paragraph:-
“(v) such part of official emoluments
arising in Sri Lanka to any
individual who is not a citizen of
Sri Lanka and not resident in Sri
Lanka–
(i) for any year of
assessment commencing
on or after April 1, 2013,
but prior to April 1, 2015
does not exceed one
hundred thousand
rupees; or
(ii) for any year of
assessment commencing
on or after April 1, 2015
does not exceed two
hundred and fifty
thousand rupees;”;
(e) by the repeal of paragraph (x) of that
subsection and the substitution therefor,
of the following new paragraph:-
“(x) any expenditure incurred by any
bank, any financial institution or
any leasing company, by way of
cost of acquisition or merger of
any other bank, any other
financial institution or any other
leasing company, where such cost
is ascertained by considering all
the facts on case by case basis in
accordance with the guidelines
Inland Revenue (Amendment) 17
Act, No. 9 of 2015
issued by the Central Bank of Sri
Lanka, in the manner specified by
the Commissioner General for that
purpose.”; and
(2) in subsection (4) of that section by the insertion
immediately after sub-paragraph (ix) of paragraph
(b) of that subsection, of the following new sub-
paragraph:-
“(x) in respect of any qualifying payment
referred to in paragraph (x) of subsection
(2), on the expenditure incurred by any bank
or other company referred to in that
paragraph in any year of assessment shall
not exceed one third of the assessable
income or three hundred million rupees
whichever is higher. The balance, if any,
not deductible in the same year of
assessment shall be carried forward and
be deductible from the assessable income
of such bank or other company for the next
succeeding year of assessment and so on
subject to the same conditions.”.
11. Section 39 of the principal enactment is hereby Amendment of
amended by the substitution for the words “The gross royalty section 39 of
the principal
payable”, of the words “ The gross royalty (not being royalty enactment.
exempt under any other provision of this Act) payable”.
12. Section 40B of the principal enactment as last Amendment of
amended by Act, No.18 of 2013 is hereby further amended by section 40B of
the principal
the substitution for the words and figures “commencing on enactment.
or