07of2014.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
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VALUE ADDED TAX (AMENDMENT)
ACT, No. 7 OF 2014
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[Certified on 24th April, 2014]
Printed on the Order of Government
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Published as a Supplement to Part II of theGazette of the Democratic
Socialist Republic of Sri Lanka of April 25, 2014.
PRINTEDATTHEDEPARTMENTOFGOVERNMENTPRINTING,SRILANKA
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Value Added Tax (Amendment) 1
Act, No. 7 of 2014
[Certified on 24th April, 2014]
L.D. – O. 4/2014
AN ACT TO AMEND THE VALUE ADDED TAX ACT, NO. 14 OF 2002
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows:-
1. This Act may be cited as the Value Added Tax Short title and
(Amendment) Act, No. 7 of 2014 and shall be deemed to date of
operation.
have come into operation on January 1, 2014.
2. Section 3 of the Value Added Tax Act, No.14 of 2002 Amendment of
(hereinafter referred to as the “principal enactment”) is hereby section 3 of Act,
No.14 of 2002.
amended as follows:-
(a) by the renumbering of that section as subsection
(1) thereof;
(b) in the renumbered subsection (1) of that section, by
the repeal of paragraph (f) and the substitution
therefor of the following:-
“(f) any person or a partnership having total
supplies for any consecutive period of three
months in any calendar year of not less than
rupees two hundred and fifty million, including
the supplies under the preceding paragraphs
of this section and any supplies exempted
under Part II of the First Schedule:”;
(c) by the repeal of the second proviso to that section
and the substitution therefor of the following:-
“Provided further, the chargeability to tax
referring to any registered person specified in
paragraph (f) shall be subject to the exemption
granted under section 8, subject to the conditions
specified therein:”;
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2 Value Added Tax (Amendment)
Act, No. 7 of 2014
(d) immediately after subsection (1) of that section, by
the insertion of the following:-
“(2) For the purposes of paragraph (f), the total
supplies means, the aggregate value of
supplies of-
(i) any person or partnership engaged in
the wholesale or retail business while
carrying on other business of similar
nature in one place or different places
under one or more registrations for the
purposes of this Act; and
(ii) with regard to any subsidiary or
associated company of a group of
companies, engaged in the wholesale
or retail business, the aggregate value
of supplies of each company of the
group, other than any company not
engaged in the wholesale or retail
business.”.
Amendment of 3. Section 8 of the principal enactment is hereby
section 8 of the amended by the substitution for the words “in the First
principal
enactment. Schedule to this Act as such supplies and imports are not
taxable unless zero rated under section 7.” of the following:-
“in the First Schedule to this Act as such supplies and
imports are not taxable unless zero rated under
section 7:
Provided that, in the case of a registered person
referred to in paragraph (f) of section 3 of this Act, the
value of the supply of goods exempted under this Act
made by such registered person directly or on behalf
of any other person, which is in excess of twenty five
per centum of the total supply of such registered person
other than zero rated supplies and where the supply is
Value Added Tax (Amendment) 3
Act, No. 7 of 2014
made by the importer himself, the value of such supply
of goods subject to Special Commodity Levy, shall
notwithstanding the provisions contained in the
Special Commodity Levy Act, No. 48 of 2007 be
deemed to be treated as liable supplies of such
registered person and chargeable to tax at the rate
specified in section 2 of this Act using the fraction on
the tax inclusive consideration:
Provided further, in the case of a registered person –
(a) who supplies pharmaceuticals, specified as
exempted in PART II of the First Schedule
to this Act; or
(b) who supplies software dedicated products
including computers and computer
accessories, exceeding seventy five per
centum of the total value of supplies
respectively of such registered person under
paragraph (a) or paragraph (b) of this proviso,
as the case may be, such registered person
shall not be liable to tax on any deemed
liable supplies referred to in this section.”.
4. Section 10 of the principal enactment is hereby Amendment of
amended in subsection (2) of that section by the substitution section 10 of the
for the words “is not less than rupees five hundred million” principal
of the words “is not less than rupees two hundred and fifty enactment.
million”.
5. Section 20 of the principal enactment is hereby Amendment of
amended by the insertion immediately after the first proviso section 20 of the
to subsection (1) of that section, of the following:- principal
enactment.
“Provided further, any tax invoice shall not be issued on
the supplies considered as deemed liable supplies referred
to in section 8 of this Act.”.
6. Section 22 of the principal enactment is hereby Amendment of
amended by the insertion immediately after subsection (11) section 22 of the
of that section, the following:- principal
enactment.
“(12) in the case of a person engaged in the insurance
business and carrying on both long term insurance
4 Value Added Tax (Amendment)
Act, No. 7 of 2014
business and general insurance business, and who
segregates such long term insurance business and the
general insurance business into two separate companies,
as required by section 53 of the Regulation of Insurance
Industry (Amendment) Act, No. 3 of 2011, the balance, if
any, of the amount unabsorbed input credit relating to
the business of general insurance as at the date of such
segregation, shall notwithstanding anything to the
contrary in any other provision of this Act, but subject to
the preceding provisions of this section, be treated as an
unabsorbed input credit by the company carrying on the
general insurance business after such segregation.
(13) any unabsorbed input credit of any bank
established under the Banking Act, No.30 of 1988 or
Finance Company licensed under the Finance Business
Act, No.42 of 2011, relating to the liable business of such
bank or finance company as at the date of acquisition or
merger of such bank or finance company, as the case may
be, shall be allowed to be claimed subject to the
provisions of this Act, and in accordance with the
guidelines issued by the Central Bank for this purpose.”.
Amendment of 7. Section 25C of the principal enactment is hereby
section 25C of
the principal amended in subsection (4) by the repeal of that subsection
enactment. and the substitution therefor of the following:-
“(4) Notwithstanding anything contained in
subsection(1), any person to whom this Chapter
applies-
(a) may in writing communicate to the
Commissioner-General, his intention to
calculate subject to the provisions of
subsection (5), the tax to which he is liable in
respect of any month commencing on or after
July 1, 2003 but for the period prior to January
1, 2014. The provisions of subsection (5)
Value Added Tax (Amendment) 5
Act, No. 7 of 2014
shall however be applicable for the period
subsequent to the communication in writing
to the Commissioner-General which
communication shall not be revocable.
(b) shall for any month commencing from
January 1, 2014, be subject to the provisions
of subsection (5).”.
8. Section 25D of the principal enactment is hereby Amendment of
amended by the substitution for the words “a tax credit shall section 25D of
the principal
be allowed” of the words and figures “a tax credit shall be enactment.
allowed for any taxable period prior to January 1, 2014”.
9. Section 40 of the principal enactment is hereby Amendment of
amended by the repeal of paragraph (iii) of the proviso to section 40 of the
principal
that section and the substitution therefor of the following:- enactment.
“(iii) as regards movable property –
(a) for any taxable period ending prior to January
1, 2014, where tax for more than four taxable
periods is in default, the tax for four taxable
periods only to be selected by the
Commissioner-General shall rank in priority
to any lien or encumbrance created bona fide
for value prior to the date of default of such
tax; and
(b) for any taxable period commencing on or
after January 1, 2014, where the tax for more
than taxable periods for five years is in default,
the tax for taxable periods within five years
only to be selected by the Commissioner-
General, shall rank in priority to any lien or
encumbrance created bona fide for value prior
to the date of default of such tax.”.
6 Value Added Tax (Amendment)
Act, No. 7 of 2014
Amendment of 10. Section 71 of the principal enactment is hereby
section 71 of the amended by the repeal of item (ii) of subsection (2) of that
principal section and the substitution therefor of the following:-
enactment.
“(ii) (a) ten per centum for the period prior to January
1, 2014;
(b) Six per centum for any period from or after
January 1, 2014
of the tax collected by the Director-General of
Customs on importation of goods referred to in
subsection (3) of section 2 on or before the fifteenth
day of the month immediately succeeding that month
and each month thereafter.”.
Amendment of 11. Section 83 of the principal enactment is hereby
section 83 of the amended in the definition of the expression “international
principal transportation” by the addition immediately after paragraph
enactment.
(c) thereof, of the following new paragraph:-
“(d) from an international airport in Sri Lanka to another
international airport in Sri Lanka by way of air
transportation.”.
Amendment of 12. The First Schedule to the principal enactment is
the First hereby amended in Part II thereof as follows:-
Schedule of the
principal
(1) in paragraph (a) of that Part, –
enactment.
(a) by the repeal of item (i) and the substitution
therefor of the following:-
“(i) wheat, wheat flour or powdered milk;”;
(b) by the repeal of item (iii) and the substitution
therefor of the following:-
“(iii) ayurvedic preparations which belong
to the Ayurveda Pharmacopoeia or
ayurvedic preparations (otherthan
Value Added Tax (Amendment) 7
Act, No. 7 of 2014
cosmetic preparations) or unani, siddha
or homeopathic preparations (other
than cosmetic preparations identified
under the Harmonized Commodity
Description and Coding System
Numbers for custom purposes) and raw
materials for such preparations with the
recommendation of the Commissioner
of Ayurveda;”;
(c) by the repeal of item (viii) and the
substitution therefor of the following:-
“(viii) agricultural tractors or road tractors
for semi-trailers prior to January 1,
2014;”;
(d) in item (xxii), by the repeal of sub item (vi)
and the substitution therefor of the
following:-
“(vi) bowsers, bulldozers, graders, levelers,
excavators, firefighting vehicles, gully
bowsers, semi-trailers for road tractors,
machinery, equipment used for garbage
disposal activities or garbage trucks;”;
(e) by the addition immediately after item (vii)
the following new item:-
“(viii) ties and bows or designer pens;”;
(f) by the addition immediately after item (xxiii)
of the following items:-
“(xxiv) frozen bait, fish hooks/rods/ reels ,
fishing tackle and marine propulsion
engines identified under the
Harmonized Commodity
Description and Coding System
Numbers for Custom proposes.;
8 Value Added Tax (Amendment)
Act, No. 7 of 2014
(xxv) copper cables for telecom industry –
– imported where such copper cables
are not available is Sri Lanka; or –
-purchased from a local
manufacturer.”.
(2) in paragraph (b) of that Part:-
(i) by the repeal of item (xiii) and the
substitution therefor of the following item:-
“(xiii) imported unprocessed timber logs,
ships , rattans or any article subject
to the Special Commodity Levy
under the Special Commodity Levy
Act, No. 48 of 2007 subject to the
condition that such goods are sold
by the importer himself without any
processing except adaptation for
sale;”;
(ii) by the repeal of item (xxxi) and the
substitution therefor of the following:-
“(xxxi) telecommunication services
subject to the telecommunication
levy under the Telecommunication
Levy Act, No. 21 of 2011;”;
(iii) by the addition immediately after item (xLvi)
of the following new items:-
“(xLvii) desiccated coconut, rubber, latex,
tea including green leaf, rice, rice
flour, bread, eggs , liquid milk so
far as such products are
manufactured locally;
Value Added Tax (Amendment) 9
Act, No. 7 of 2014
(xLviii) machinery or equipment for tea or
rubber industry or agricultural
tractors or road tractors for semi-
trailers, so far as such products are
manufactured locally;
(xLix) services by any headquarters or
regional head offices of institutions
in the international network
relocated in Sri Lanka as exempted
for income tax purposes under
section 7 of the Inland Revenue
Act, No. 10 of 2006, so far as such
receipts are in foreign currency
received.
(L) locally manufactured ayurvedic
preparations which belong to the
Ayurveda Pharmacopoeia or
Ayurveda preparations (other than
cosmetic preparations) or unani,
siddha or homeopathic
preparations (other than cosmetic
preparations).”.
(3) in item (xvi) of paragraph (c) of that Part by the
substitution for the words “machinery identified
under” of the words and figures “machinery prior
to January 1, 2014 identified under”.
13. In the principal enactment, – General
amendment to
the principal
(a) by the substitution for the word “Commissioner”
enactment.
wherever that word appears of the words “Senior
Commissioner”;
(b) by the substitution for the words “Deputy
Commissioner” wherever such words appear of the
word “Commissioner”;
10 Value Added Tax (Amendment)
Act, No. 7 of 2014
(c) by the substitution for the word “Senior Assessor”
wherever such word appears of the words “Senior
Commissioner” or “Deputy Senior Commissioner”;
(d) by the substitution for the word “Assessor”
wherever such word appears of the words “Assessor”
or “Assistant Commissioner”.
Validation. 14. Any person who is authorized to collect the Value
Added Tax as provided for in this Act during any period
commencing from January 1, 2014 and ending on the date
on which the Certificate of the Speaker is endorsed in respect
of this Act shall be deemed to have acted with due authority
and such collection shall be deemed to have been, and to be,
validly made and such person is hereby indemnified against
all actions civil or criminal, in respect of such collection :
Provided that, the aforesaid provisions shall not affect
any decision or Order made by any Court or any proceedings
pending in any Court in respect of any tax collected as
provided for in this Act during such period.
Sinhala text to 15. In the event of any inconsistency between the
prevail in case Sinhala and Tamil texts of this Act, the Sinhala text shall
of inconsistency.
prevail.

Value Added Tax (Amendment) 11
Act, No. 7 of 2014
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