ACT, No. 10 OF 2011

10of2011.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
NATION BUILDING TAX (AMENDMENT)
ACT, No. 10 OF 2011
[Certified on 31st March, 2011]
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 April 01, 2011
PRINTEDAT THEDEPARTMENT OFGOVERNMENTPRINTING,SRILANKA
TO BEPURCHASED AT THEGOVERNMENT PUBLICATIONSBUREAU, COLOMBO 5
Price : Rs. 8.00 Postage : Rs. 10.00

Nation Building Tax (Amendment) 1
Act, No. 10 of 2011
[Certified on 31st March, 2011]
L. D.—O. 15/2011.
AN ACT TO AMEND THE NATION BUILDING TAX ACT NO. 9 OF 2009
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows :—
1. This Act may be cited as the Nation Building Tax Short title.
(Amendment) Act, No. 10 of 2011 and shall be deemed to
have come into operation from January 1, 2011.
2. Section 2 of the Nation Building Tax Act, No. 9 of Amendment of
2009 (hereinafter referred to as the “principal enactment”) is the section 2 of
the Act No. 9 of
hereby amended in subsection (1) of that section, by the
2009.
substitution in substction (c) thereof, for the words “a service
of any description.”, of the following :—
“a service of any description; or
(d) carries on the business of wholesale or retail sale of
any article other than such sale by the manufacturer
of that article being a manufacturer to whom the
provisions of paragraph (b) applies.”.
3. Section 3 of the principal enactment is hereby Amendment of
amended as follows:— the section 3 of
the principal
(1) in subsection (1) of that section— enactment.
(a) by the substitution for all the words and figures
from “every person to whom this Act applies,
calculated” to “in the following manner:-”, of
the words “every person to whom this Act
applies, calculated at the appropriate rate
specified in the Second Schedule to this Act, in
the following manner:—”
(b) in paragraph (ii) thereof, by the substitution for
the words and figures “paragraph (b) or (c) of
subsection (1)”, of the words “paragraphs (b),
(c) or (d) of subsection(1)”
2 Nation Building Tax (Amendment)
Act, No. 10 of 2011
(2) in subsection (2) of that section—
(a) by the substitution in paragraph (i) thereof,
for the words and figures “under section 6 of
the Value Added Tax Act, No. 14 of 2002;” of
the words and figures “under section 6 of the
Value Added Tax Act, No. 14 of 2002, but does
not include the value of any excepted article
referred to in the First Schedule to this Act;”;
(b) by the substitution in paragraph (ii) thereof,
for the words “of every article manufactured
by such person;” of the words “of any article
manufactured by such person, other than any
excepted article referred to in the First Schedule
to this Act;”;
(c) by the substitution in paragraph (iii), for the
words “any service referred to in that
paragraph.”, of the following:—
“any service referred to in that paragraph,
other than any excepted service referred to in
the First Schedule to this Act;
(iv) with reference to any person referred to in
paragraph (d) of subsection (1) of section
2 and to any relevant quarter means the
sum receivable whether received or not
from the sale in that quarter, of any article,
other than—
(1) pharmaceuticals;
(2) any article subject to the Special
Commodity Levy under the Special
Commodity Levy Act, No. 48 of
2007, where such article is
subsequently sold by the importer of
such article; and
Nation Building Tax (Amendment) 3
Act, No. 10 of 2011
(3) gems or jewellery, if sold on the
payment of foreign currency by any
person authorized by the Central Bank
of Sri Lanka to accept payment in
foreign currency.”.
(3) in subsection (3) of that section—
(a) by the substitution, for the words and figures
“in paragraph (ii) or (iii) of that section” of the
words and figures “in paragraph (ii), (iii) or
(iv) of that section”;
( b) by the addition immediately after paragraph
(iii) thereof, of the following paragraphs:—
“(iv) rebate paid under the Export
Development Rebate in relation to any
international event as be approved by
the Minister of Finance;
(v) any turnover from the supply of any
goods or services in relation to any
international events as approved by
the Minister of Finance (with effect
from May 12, 2010).”.
(4) in subsection (4) thereof,
(a) by the substitution for the words and figures
“paragraph (b) or paragraph (c) of subsection
(1) of section 2”, of the words and figures
“paragraph (b), paragraph (c) or paragraph (d)
of subsection (1) of section 2”;
(b) in paragraph (i), by the substitution for the
words “liable turnover of such person for that
relevant quarter does not exceeds” of the
4 Nation Building Tax (Amendment)
Act, No. 10 of 2011
words and figures “such quarter is a relevant
quarter which commenced prior to January 1,
2011 and the liable turnover of such person
for that relevant quarter does not exceed;”;
(c) in paragraph (ii) thereof—
(i) by the substitution for the words “that
relevant quarter optional Value Added
Tax” of the words and figures “that relevant
quarter which commenced prior to January
1, 2011, Optional Value Added Tax”;
(ii) by the substitution for the words and
figures “Value Added Tax Act, No. 14 of
2002.” of the following:—
“Value Added Tax Act, No. 14 of 2002;
(d) by the addition immediately after paragraph
(ii) of the following new paragraphs :—
(iii) such relevant quarter is any quarter
commencing on or after January 1, 2011
and the liable turnover of such person from
the supply of any goods or services other
than services referred to in paragraph (iv)
and paragraph (v), does not exceed the
sum of five hundred thousand rupees; and
(iv) such quarter is a quarter commencing on
or after January 1, 2011 and the liable
turnover of such person from—
(a) operating a hotel, guest house,
restaurant or other similar
business;
Nation Building Tax (Amendment) 5
Act, No. 10 of 2011
(b) the processing of any locally
procured agricultural produce
in the preparation for sale;
(c) providing educational services
by any institution established
locally for that purpose; or
(d) supply of labour (manpower),
and which do not exceed the sum of
twenty five million rupees.”.
4. Section 4 of the principal enactment is hereby Replacement of
repealed and the following section substituted therefor:— the section 4 of
the principal
“Payment of 4. Every person referred to in paragraph enactment.
the tax (b), paragraph (c) or paragraph (d) of subsection
(1) of section 2 to whom this Act applies,shall,
notwithstanding that no assessment has been
made on such person for any relevant quarter,
pay—
(i) the tax payable for the first month of that
quarter on or before the twentieth day of
the second month of that quarter;
(ii) the tax payable for the second month of
that quarter on or before the twentieth
day of the third month of that quarter;
(iii) the balance tax payable for that quarter
on or before the twentieth day of the
month immediately succeeding the end
of the relevant quarter, calculated by
deducting the tax paid under paragraphs
(i) and (ii) from the tax payable for that
quarter,
to the Commissioner-General, in such manner
as may be specified by him in that behalf.”.
6 Nation Building Tax (Amendment)
Act, No. 10 of 2011
Replacement of 5. Section 6 of the principal enactment is hereby
section 6 of the
repealed and the following section substituted therefor:—
principal
enactment.
“Tax Credits. 6. Where any person to whom this Act
applies, utilizes wholly or partly any goods
purchased from a manufacturer registered for
payment of tax under this Act or imported by
himself, in the manufacture of goods liable to
tax under this Act, such manufacturer shall be
entitled to tax credit in respect or such tax paid
on such goods in proportion to the value of
goods manufactured by such person which are
liable to tax under this Act.”.
Insertion of new 6. The following new section is hereby inserted
section 6A in the
immediately after section 6 of the principal enactment and
principal
enactment. shall have effect as section 6A of that enactment :—
“Turnover 6A. (1) The turnover from the business of
from Islamic
Financial any Islamic Financial Transaction shall be
Transactions chargeable to tax in terms of the provisions of
to be this Act.
chargeable to
tax.
(2) The Commissioner – General of Inland
Revenue shall in order to determine the extent
of liability to tax of any particular Islamic
Financial Transaction, issue from time to time,
such rules and guidelines as may be required
for the purpose of –
(a) identifying the circumstances
which would amount to an
Islamic Financial Transaction ;
and
(b) ascertaining the profits and
income arising out of any
Islamic Financial Transaction.”.
Nation Building Tax (Amendment) 7
Act, No. 10 of 2011
7. Section 10 of the principal enactment is hereby Amendment of
amended as follows: the section 10 of
the principal
enactment.
(1) in the definition of the expression “article”, by the
substitution for the words “any agricultural or
horticultural produce, but does not include any
excepted article”, of the words “any agricultural or
horticultural produce, but for any period ended prior
to January 1, 2011 does not include any excepted
article”;
(2) in the definition of the expression “service”, by the
substitution for the words “does not include any
excepted service”, of the words “for any period
ended prior to January 1, 2011 does not include
any excepted service”,
(3) in the definition of the expression “person”, by the
substitution for the words “any company, body of
persons or any partnership”, of the words “any
company, body of persons or any partnership”.
8. The Schedule to of the principal enactment is hereby Amendment of
amended as follows:— the Schedule to
the principal
enactment.
(1) by the renaming of the “SCHEDULE” hereto as the
“FIRST SCHEDULE”;
(2) in Part I of such Schedule—
(a) in item (xiii), by the substitution for the words
“pharmaceuticals; and”, of the words
“pharmaceuticals;”
(b) in item (xv), by the substitution for the words
“borne by the Goverment” of the words “borne
by the Government ;”
8 Nation Building Tax (Amendment)
Act, No. 10 of 2011
(c) by the addition immediately after item (xv)
thereof of the following items:—
“(xvi) any goods imported or supplied to a
specified project carried on, out of
foreign funds or donations received by
the Goverment,as approved by the
Minister considering the economic
benefit to the country.
(xvii) bitumen classified under HS code
No. 2714 ;
(xviii) any article imported or sold by any
society registered under Co- operative
Societies Act, No. 5 of 1972 or under
the respective statutes enacted by the
Provincial Councils providing for such
registration or Lak Sathosa Limited
registered under the Companies Act,
No. 7 of 2007 ;
(xix) tractors classified under HS codes
8701.10. 10, 8701. 10. 90, 8701. 90. 10
and 8701.90.20 ;
(xx) raw materials or packing materials
imported for the manufacture of
pharmaceuticals subject to the approval
of the relevant authority ;
(xxi) gold imported (effective from March
1, 2010) ;
(xxii) plant, machinery or equipment
imported on temporary basis for the use
of large scale infrastructure
development projects approved by the
Nation Building Tax (Amendment) 9
Act, No. 10 of 2011
Minister in charge of the subject of
Finance as being of benefical for the
economic development of Sri Lanka,
on condition that goods will be re-
exported after the completion of work
(effective from July 1, 2010);
(xxiii) foreign currency notes imported, being
notes clssified under HS Codes
4907.00.90 (effective from June 1,
2010) ;
(xxiv) raw materials or packing materials
imported for the manufacture of
ayurvedic preparations which belong
to the Ayurveda Pharmacopoeia or
ayurveda preparation subject to the
approval of the relevant authority ;
(xxv) pure-bred breeding animals under HS
0102.10 or HS 0104.20.10, milking
machines under HS 8434.10, dairy
machinery under HS 8434. 20 and spare
parts under HS 8434.90, at the point of
importation. (effective from
18.01.2011);
(xxvi) import of samples in relation to
business which is worth not more than
rupees twenty- five thousand, subject
to which terms and conditions as
prescribed by the Director – General of
Customs.”.
(3) in Part II of that Schedule—
(a) in item (vii), by the substitution for the words
“services of a construction contractor, not
being a sub-contractor, insofar as”, of the
following words and figures:—
10 Nation Building Tax (Amendment)
Act, No. 10 of 2011
“Services—
(i) prior to January 1, 2011, of a
construction contractor, not being a
sub-contractor; or
(ii) on or after January 1, 2011, of a
construction contractor or sub-
contractor”,
in so far as”;
(b) in item (xii), by the substitution for the words
“operating a hotel, guest house, restaurant or
other similar business”, of the words and
figures “For any period ended prior to January
1, 2011, operating a hotel, guest house,
restaurant or other similar business”;
(c) in item (xiii), by the substitution for the words
“local produce”, of the words “local
produce”;
(d) in item (xxiii), by the substitution for the
words “Act, No. 34 of 2002,”, of the words
“Act, No. 34 of 2002;”;
(e) by the addition, immediately after the item
(xxiii), the following new items:—
(xxiv) the services provided by foreign
consultancies for the large scale
infrastructure development projects
being projects which have been
approved by the Minister of Finance,
as beneficial for the economic
development of Sri Lanka (effective
from July 1, 2010)
Nation Building Tax (Amendment) 11
Act, No. 10 of 2011
(xxv) services provided to any specific
project carried on, out of foreign funds
or donations received by the
Government, as approved by the
Minister considering the economic
benefit to the country;
(xxvi) services provided to the port or airline
in relation to international
transportation;
(xxvii) services provided in relation to ship
building for the international market
for payments made in foreign
currency;
(xxviii) telecommunication services;
(xxix) supply of locally developed soft ware;
(xxx) services provided by any Government
Department, Ministry or any
undertaking fully owned by the
Government;
(xxxi) services provided by Sri Lankan
Airlines Ltd.;
(xxxii) services provided by Mihin Air (Pvt.)
Ltd.;
(xxxiii) services provided by Air Lanka
Catering Services Ltd.;
(xxxiv) services provided by any society
registered under the Co-operative
Societies Law No. 5 of 1972 or under
any Statute enacted by a Provincial
Council, or Lak Sathosa Limited,
registered under the Companies Act,
No. 7 of 2007;
12 Nation Building Tax (Amendment)
Act, No. 10 of 2011
Addition of 9. The following new Schedule, as the Second Schedule,
Second is added immediately after the First Schedule:—
Schedule to the
principal
enactment. “SECOND SCHEDULE [Section 3]
Tax Rates of Nation Building Tax payable by any person to
whom this Act applies
PART I
For the period ending on April 30, 2009
on the liable turnover – 01 per centum.
PART II
For the period commencing on May 1, 2009 but
prior to December 31, 2010—
(1) on the liable turnover (other than in respect
of turnover from the sale of rice manufactured
from locally procured paddy for the period
from July 1, 2009 to December 31, 2010)
– 03 per centum.
(2) on the liable turnover from rice manufactured
out of locally procured paddy for the period
from July 1, 2009 to December 31, 2010
– 1.5 per centum.
PART III
For any quarter commencing on or after January 01, 2011–
(1) on the liable turnover (other than any
turnover from the wholesale or retail sale) of
any article
– 02 per centum.
(2) on the liable turnover from wholesale or retail
sale of any article–
(a) three fourth of liable turnover of any
distributor–
Nil
Nation Building Tax (Amendment) 13
Act, No. 10 of 2011
(b) one half of the liable turnover from
(the wholesale or retail sale of) any
article other than any turnover of a
distributor–
Nil
(c) the balance liable turnover
– 02 per centum.
For the purposes of Part III of the
Second Schedule the expression
“distributor”, shall have the same
meaning as is assigned to it in section
13 of the Economic Service Charge
Act, No. 13 of 2006.”.
10. The Commissioner-General shall transfer 33 1/3 per Apportionment
centum of the total sum collected as Nation Building Tax to of revenue to
the respective Provincial Council within such intervals and the Provincial
Councils,
in such proportions as the Secretary to the Treasury may,
from time to time, taking into consideration the required
budget of each such Council, direct.
11. Any person or partnership carrying on an enterprise, Exemption of
having an annual turnover of a sum not exceeding rupees certain small and
one hundred million who is liable to pay the Nation medium
enterprises from
Building Tax under this Act and who has defaulted in the
the payment of
payment of such Nation Building Tax as is payable by him taxes payable by
under this Act in respect of any taxable quarter ending on or them .
before December 31, 2010 due to the existence generally of
any conflict environment or due to any financial constraints
of such person or partnership shall be exempted from the
payment of such charge as is in default under this Act:
Provided that, the Commissioner – General of Inland
Revenue shall on a request made in that behalf, issue to
such person or partnership a Certificate of Exemption in
respect of the sum in default:
Provided futher, the person or partnership to whom the
Certificate of Exemption is issued shall simultaneously
forward to the Commissioner – General of Inland Revenue,
a written assurance to the effect that such person or
14 Nation Building Tax (Amendment)
Act, No. 10 of 2011
partnership will be responsible for the payment of all sums
which may become payable by him under this Act, in respect
of any future taxable quarter commencing on or after January
1, 2011.
Indemnity. 12. Where the Commissioner – General of Inland
Revenue or the Director – General of Customs as the case
may be collects under the provisions of section 4 or section
5 respectively of the principal enactment, the levy calculated
at the rate specified in section 3 of this Act, during the period
commencing on January 1, 2011 and ending on the date of
the coming into operation of this Act from a person to whom
the provisions of this Act applies, such collection shall be,
deemed for all purposes to have been, and to be, validly
made, and the Commissioner – General of Inland Revenue
and the Director – General of Customs , as the case may be,
are hereby indemnified against all actions, civil or criminal
in respect of such collection.
Sinhala text to 13. In the event of any inconsistency between the
prevail in case
Sinhala and Tamil texts of this Act, the Sinhala text shall
of an
inconsistency. prevail.

Nation Building Tax (Amendment) 15
Act, No. 10 of 2011
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