ACT, No. 15 OF 2007

15of2007.pdf
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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
—————————
ECONOMIC SERVICE CHARGE
(AMENDMENT) ACT, No. 15 OF 2007
—————————
[Certified on 12th April, 2007]
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 12, 2007
PRINTEDATTHE DEPARTMENTOFGOVERNMENTPRINTING,SRI LANKA
TOBEPURCHASED ATTHEGOVERNMENTPUBLICATIONSBUREAU,COLOMBO1
Price : Rs. 8.25 Postage : Rs. 5.00

Economic Service Charge (Amendment) 1
Act, No. 15 of 2007
[Certified on 12th April 2007]
L.D.—O. 9/2007.
ANACT TO AMEND THE ECONOMIC SERVICE CHARGEACT
BE it enacted by the Parliament of the Democratic Socialist
Republic of Sri Lanka as follows :—
1. This Act may be cited as the Economic Service Charge Short Title.
(Amendment) Act, No. 15 of 2007, and shall come into
operation with effect from April 1, 2007.
2. Section 2 of the Economic Service Charge Act, No. Amendment of
Section 2 of Act,
13 of 2006 (hereinafter referred to as the “principal
No. 13 of 2006.
enactment”) is hereby amended as follows:—
(1) in subsection (2) of that section, by the substitution
for the words “for that relevant quarter does not
exceed rupees ten million.”, of the words and
figures—
“ for that relevant quarter,—
(a) commencing before March 31, 2007, does
not exceed rupees ten million ; and
(b) commencing on or after April 1, 2007 does
not exceed rupees seven million five
hundred thousand.”;
(2) in the proviso to paragraph (a) of subsection (3) of
that section, by the substitution for all the words
from “shall not include any trade or business” to the
end of that paragraph, of the words and figures—
“shall not include—
(i) for any relevant quarter of the year of
assessment commencing on April 1, 2006
2 Economic Service Charge (Amendment)
Act, No. 15 of 2007
and ending on March 31, 2007, any trade or
business of any person or partnership, which
deals in the wholesale or retail trade of any
goods not manufactured or produced by such
person or partnership ; and
(ii) for any relevant quarter of the year of
assessment commencing on or after April 1,
2007, any trade or business, other than—
(A) any manufacturing business; and
(B) any business of a reopened factory
referred to in section 24B of the
Inland Revenue Act, No. 10 of 2006.
Amendment of 3. Section 3 of the principal enactment is hereby amended
Section 3 of the as follows :—
principal
enactment.
(1) by the repeal of subsections (3), (4) and (5) of that
section and the substitution therefor of the following
subsection :—
“(3) The balance, if any, of the amount levied
as Economic Service Charge after the deduction
in accordance with subsections (1) or (2) as the
case may be, apportioned to each year of assessment
within the period of four years immediately
succeeding the first mentioned year of assessment
and the amount so apportioned to any such year of
assessment shall be deducted to the extent, it can
be so deducted from the income tax payable by
such person or partner of such partnership for that
year of assessment.”;
(2) by the renumbering of subsection (6) of that section
as subsection (4) thereof ; and
Economic Service Charge (Amendment) 3
Act, No. 15 of 2007
(3) in the renumbered subsection (4), by the substitution
for paragraph (b) thereof, of the following
paragraph:—
“(b) The remaining portion, if any, of the balance
referred to in subsection (3) after its deduction
in accordance with that subsection, be
deducted from any income tax payable for
any year of assessment succeeding the fourth
year of assessment immediately succeeding
the first mentioned year of assessment . ”.
4. Section 4 of the principal enactment is hereby amended Amendment of
by the substitution for the words and figures “referred to in section 4 of the
principal
sub-paragraph (b) of subsection (6) of section 3, shall” of the
enactment.
words and figures “referred to in sub-paragraph (b) of
subsection (4) of section 3, shall”.
5. Section 9 of the principal enactment is hereby amended Amendment of
as follows :— section 9 of the
principal
enactment.
(1) by the renumbering of that section as subsection (1)
of that section ;
(2) by the addition, immediately after the renumbered
subsection (1) of the following new subsections :—
“(2) Where it appears to an Assessor that any
person or partnership liable to pay the Economic
Service Charge for any relevant quarter of any
year of assessment, has been assessed at less than
the proper amount, the Assessor may, subject to
the provisions of subsection (3) and subsection
(4), assess such person or partnership for the
additional amount (which in his opinion such
person or partnership ought to have been assessed
in addition to the amount originally assessed), and
the provisions of this Act as to notice of assessment,
appeal and other proceedings shall thereupon
apply to the recovery of such additional amount.
4 Economic Service Charge (Amendment)
Act, No. 15 of 2007
(3) Where a person or partnership has furnished
a return of Economic Service Charge, the assessor
may in making an assessment on such person or
partnership under subsections (1) or (2), either :—
(a) accept the return furnished by such person
or partnership ; or
(b) refuse to accept the return made by that
person or partnership, and estimate the
amount of the relevant turnover and assess
such person or partnership accordingly :
Provided that where the Assessor refuses to accept
a return furnished by any person or partnership and
makes an assessment or an additional assessment for
any relevant quarter on such person or partnership
under subsection (1) or subsection (2), he shall
communicate to such person in writing, stating the
reasons as to why he is not accepting the return
furnished by that person or partnership.
(4) No assessment or additional assessment
shall be made under this Act in respect of a person
or partnership who or which has made a return for
any relevant quarter in any year of assessment on
or before the dates referred to in section 7, after the
expiry of eighteen months from the end of the year
of assessment within which such relevant quarter
falls, if his or its return of income has been made
under subsection (1) or subsection (7) of section
106 of the Inland Revenue Act, No. 10 of 2006.”.
Amendment of 6. Section 13 of the principal enactment is hereby
section 13 of the amended in the definition of the expression “person”, by the
principal
addition immediately after the sub-paragraph (b) of that
enactment.
definition, of the following :—
“(c) any government institution or any local authority
as defined in the Inland Revenue Act, No. 10 of
2006.”.

Economic Service Charge (Amendment) 5
Act, No. 15 of 2007
7. The Schedule to the principal enactment is hereby Amendment
of Schedule
repealed and the following Schedule substituted therefor:— to the
principal
enactment.
“SCHEDULE
Part of the Liable Turnover Rate of the
service charge
Applicable to
that Part
1. Such part of the relevant turnover as consists of
the turnover from any trade, business, profession
or vocation:
(i) the profit and income from which are
exempt from income tax;
(ii) of any enterprise which has entered into 0.25 per centum
an agreement under the Board of
Investment of Sri Lanka Law No. 4 of
1978, being the relevant turnover during
the period for which the profits and
income of such enterprise are exempt
from income tax under such agreement.
2. Such part of the relevant turnover as consists of
the turnover from any trade or business which
deals in wholesale or retail of such goods (other
than as a distributor or dealer in motor vehicles
or liquor) not manufactured or produced by the
dealer. 0.25 per centum
3. Such part of the relevant turnover as consists of
the turnover from the primary conversion of
any produce of any tea, rubber or coconut
plantation including desicated coconut, coconut
oil, coconut fibre, copra and sheet rubber but
excluding any such conversion which produces
any alcoholic beverage. 0.25 per centum
4. Such part of the relevant turnover as consists of
the turnover from any trade, business, profession
or vocation:
(i) the profits and income from which are
chargeable with income tax at any rate
specified in the Fifth Schedule to the
Inland Revenue Act other than in item
28 of that Schedule.
6 Economic Service Charge (Amendment)
Act, No. 15 of 2007
(ii) of any enterprise which has entered into
an agreement under the Board of
Investment of Sri Lanka Law, No. 4 of
1978, being the relevant turnover during
the period for which the profits and
income of such enterprise are taxable at
the rate equal to a rate specified in the
Fifth Schedule to the Inland Revenue
Act, No. 10 of 2006. 0.5 per centum
5. Such part of the relevant turnover as consists of
the turnover from any trade or business which
deals in the wholesale or retail (other than as
distributor) of motor vehicles or liquor not
manufactured by the dealer. 0.5 per centum
6. Such part of the relevant turnover as consists of
the turnover from any trade, business, profession
or vocation, the profits and income such are
chargeable with income tax at the rates specified
in Part A or B (i) of the Second Schedule to the
Inland Revenue Act, except in the case such
turnover falls within the turnover referred to in
items 1, 2 or 3 of this Schedule. 0.5 per centum
7. Such part of the relevant turnover as consists of
the turnover from any trade or business of a
distributor. 0.05 per centum
8. Such part of the relevant turnover as consists of
the turnover from any trade, business, profession
or vocation the profits and income of which are
chargeable with income tax at any rate other
than a rate specified in the Fifth Schedule to the
Inland Revenue Act, No. 10 of 2006. 1.0 per centum
9. Such part of the relevant turnover as consists of
the turnover from any trade or business of
carrying on any activity referred to in item 28 of
the Fifth Schedule to the Inland Revenue Act,
No. 10 of 2006. 1.0 per centum
10. Such part of the relevant turnover, which consists
of, the relevant turnover from any trade or
business referred to in Section 42 of the Inland
Revenue Act, No. 10 of 2006. 0.1 percentum

Economic Service Charge (Amendment) 7
Act, No. 15 of 2007
11. Such part of the relevant turnover as consists of—
(i) the turnover from the export of apparels or the
supply of locally manufactured textiles to
apparel exporters to be used in the manufacture
of apparels for export by such exporter. 0.1 per centum.
(ii) the turnover of a trading house approved by
the Board of Investment so far as such trading
house engages in the business of the export of
apparels.
12. Any relevant turnover not referred to in items 1 to
11 above. 1.0 per centum.
8. In the event of any inconsistency between the Sinhala Sinhala text to
prevail in case of
and Tamil texts of this Act, the Sinhala text shall prevail. inconsistency.

8 Economic Service Charge (Amendment)
Act, No. 15 of 2007
Annual subscription of English Bills and Acts of the Parliament Rs. 885 (Local), Rs. 1,180
(Foreign), payable to the SUPERINTENDENT, GOVERNMENT PUBLICATIONS BUREAU, NO. 32, TRANSWORKS
HOUSE, LOTUS ROAD, COLOMBO 01 before 15th December each year in respect of the year following.
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