ACT, No. 16 OF 2010

16of2010.pdf
NadunReplacecont

PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
DEFAULT TAXES (SPECIAL PROVISIONS)
ACT, NO. 16 OF 2010
[Certified on 07th December, 2010]
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 December 10, 2010
PRINTEDAT THEDEPARTMENT OFGOVERNMENTPRINTING,SRILANKA
TO BEPURCHASED AT THEGOVERNMENT PUBLICATIONSBUREAU, COLOMBO 5
Price : Rs.7.00 Postage : Rs.10.00

Default Taxes (Special Provisions) 1
Act, No. 16 of 2010
[Certified on 07th December, 2010]
L.D.—O. 14/2010.
AN ACT TO PROVIDE FOR A STREAMLINED AND SPEEDIER PROCESS FOR
THE RECOVERY OF TAXES IN DEFAULT IN A TIME BOUND MANNER ; TO
PROVIDE FOR THE WRITING-OFF OF TAXES IN DEFAULT IN CERTAIN
CIRCUMSTANCES AND FOR MATTERS CONNECTED THEREWITH AND
INCIDENTAL THERETO.
WHEREAS it has become imperative to formulate a Preamble.
mechanism for the speedy recovery of taxes imposed under
certain specified laws and which have been in default for
over a long period of time :
AND WHEREAS it has become necessary in order to
facilitate such process, to evolve a method for the recovery
of some of these default taxes in a manageable and justifiable
manner and to ensure that in the future, taxes in arrears are
maintained at a reasonable limit and the officials entrusted
with this task be made more accountable towards the
collection of these taxes :
AND WHEREAS it has also become necessary to write-off
some of the taxes which are in default, adopting a transparent
and an accountable process :
NOW THEREFORE be it enacted by the Parliament of the
Democratic Socialist Republic of Sri Lanka as follows :—
1. This Act may be cited as the Default Taxes (Special Short title and
Provisions) Act, No. 16 of 2010 and the provisions of this date of
operation.
Act other than this section, shall come into operation on
such date as may be determined by the Minister by Order
published in the Gazette (hereinafter referred to as the
“appointed date”). The provisions of this section shall come
into effect, in terms of paragraph (1) of Article 80 of the
Constitution, on the date on which the Certificate of the
Speaker is endorsed.
2—PL 005271—4,190 (10/2010)
2 Default Taxes (Special Provisions)
Act, No. 16 of 2010
Application of 2. Notwithstanding anything in any other written law
the provisions of to the contrary, the provisions of this Act shall apply to the
the Act.
recovery, discharge or write-off of taxes charged and levied
on or before December 31, 2009 under any of the laws
specified in the Schedule to this Act and which continue to
be in default under any such laws, for a period of over two
years or more, or where applicable, after the appellate
procedures specified in any such laws for the recovery of
any such tax (in this Act referred to as “tax in default”) have
been exhausted :
Provided however where pursuant to any action taken for
the recovery of any tax in default prior to the appointed
date, a defaulter has agreed to or an effective arrangement
has been made for the settlement of such tax in default, by
the payment of the same in installments or otherwise and
the defaulter concerned has thereafter failed to comply with
such agreement or arrangement, as the case may be, the
provisions of this Act shall apply in regard to the recovery
of the balance sum remaining unpaid in terms of such
agreement or arrangement, other than in instances where
such agreement or arrangement was entered into or made, in
pursuance of an order made by a court.
Appointment of 3. (1) The Minister shall appoint an Advisory
an Advisory
Committee (hereinafter referred to as the “Committee”)
Committee.
consisting of five members of whom one member shall be a
retired judge of the Supreme Court or of the Court of Appeal
or of the High Court, as the case may be, who shall be the
Chairman of the Committee. The other four members shall
be selected from among persons who have knowledge,
experience and shown capacity in taxation law, accountancy
and auditing, business management or finance.
(2) The quorum for any meeting of the Committee shall
be three members and the Chairman shall preside at all
meetings of the Committee. In the absence of the Chairman
from any meeting of the Committee, the members present
shall elect one of the members present to preside at such
meeting.
Default Taxes (Special Provisions) 3
Act, No. 16 of 2010
(3) The Committee may regulate the procedure in regard
to the meetings of the Committee and the transaction of all
business at such meetings.
(4) The Minister may for reasons assigned therefor, remove
a member of the Committee from his office by a letter sent to
him in that behalf. A member of the Committee may resign
from his office by letter to that effect addressed to the Minister
and such resignation shall take effect upon it being accepted
by the Minister writing.
(5) The members of the Committee may be paid an honorarium
in such amount as may be determined by the Minister.
4. (1) The functions of the Committee shall be to:— Functions of the
Committee.
(a) respond to communications received from the
Commissioner-General under section 7, regarding
the write-off of any tax in default ; and
(b) advise on any matter referred to it for its advice by
the Commissioner-General or the Minister, as the
case may be.
(2) In the discharge of its functions, the Committee shall
have the power to summon any person whom it considers is
able to give any information or produce any document, with
regard to a matter which is before such Committee for its
deliberation.
5. There shall be established a unit called the Default Establishment of
Tax Recovery Unit under the purview of the Commissioner- the Default Tax
Recovery Unit.
General, with a Deputy Commissioner-General assigned to
be in charge of such unit.
6. The Commissioner-General shall within six months Report on taxes
of the date of the appointment of the Committee, cause the in default to be
prepared.
Default Tax Recovery Unit to prepare and finalize a report,
identifying taxes in default of:—
(a) Public Corporations ;
4 Default Taxes (Special Provisions)
Act, No. 16 of 2010
(b) Government Owned Business Undertakings ;
(c) Government Owned Business Undertakings
established as corporations under section 2 of the
Conversion of Government Owned Business
Undertakings into Public Corporations Act, No. 22
of 1987 ;
(d) Government Ministries ;
(e) Government Departments ; and
(f) Co-operative Societies registered under the
Co-operative Societies Law, No. 5 of 1972,
including any Corporative Rural Bank.
Certain taxes in 7. (1) Subject to the provisions of subsection (2), with
default to be regard to taxes in default of any institution identified under
written off.
section 6 of this Act, the Commissioner-General shall:—
(a) having verified from the persons concerned of the
accuracy of the amount recorded as being due as
tax in default ; and
(b) having obtained the confirmation of the Secretary
to the Treasury that such institutions is dependent
on Government funding to meet its tax liabilities,
take all necessary steps to write-off the tax in default of such
identified institution.
(2) The Commissioner-General shall three months prior
to taking necessary steps to write-off any tax in default under
subsection (1), inform the Committee of such fact and the
Committee shall be entitled to make any comments on the
same within three months of the receipt of such information.
In the event the Committee makes any comments, it shall be
the responsibility of the Commissioner-General to respond
to such comments immediately.
Default Taxes (Special Provisions) 5
Act, No. 16 of 2010
8. Where any tax in default is written-off under section write-off of any
7 of this Act:— tax in default to
be published in
the Gazette.
(a) the Commissioner-General shall, notwithstanding
any provision relating to secrecy contained in the
law under which the tax in default was levied and
charged, publish that information in the Gazette,
within thirty days of the date of such write-off ; and
(b) the tax in default which had been written-off is
subsequently recovered under the provisions of the
relevant law under which such tax was charged and
levied, the amount so recovered shall not be
refunded to the defaulter.
9. (1) Where any tax in default is not written-off under Issue of notice
section 7, then, notwithstanding:— to those whose
tax in default is
(a) any agreement that may have been entered into by to be recovered.
the defaulter with the Commissioner-General for
the payment in installment of the sum in default ;
or
(b) the commencement of any proceedings for the
recovery of such tax under the law under which
such tax was levied and charged, other than where
any proceedings for recovery has been filed in a
court,
the Commissioner-General shall issue a notice to the
defaulter concerned, setting out the details of the amount
due as tax in default and requesting that such amount be
settled within sixty days of the receipt of such notice.
(2) A defaulter who is issued with a notice under subsection
(1) may, prior to the expiry of the sixty days referred to therein,
shall write to the Commissioner-General:—
(a) requesting that such defaulter be permitted to settle
the amount of tax in default in installments as shall
be agreed to with the Commissioner-General ; or
6 Default Taxes (Special Provisions)
Act, No. 16 of 2010
(b) raising any objections in regard to the payment of
the tax in default referred to in the notice.
(3) Where a defaulter makes a request for the payment of
the tax in default in installments, the Commissioner-General
may agree to such payment, subject to the condition that the
payment of the amount due is paid in full within a period not
exceeding three years from the date of entering into such
agreement. The Commissioner-General shall also inform the
Committee of the details of the agreement entered into with
the defaulter.
(4) Where the defaulter raises any objections in regard to
the payment of the tax in default referred to in a notice sent,
the Commissioner-General shall make his decision in regard
to the same within sixty days of the receipt of such objections
and where the objection involves a re-determination of the
tax liability concerned, he shall discharge the excess if any,
of the tax in default over the amount so determined.
Consequences of 10. Where a defaulter to whom a notice is sent under
not responding subsection (1) of section 9:—
to a notice sent
under section 9.
(a) fails to respond to the notice within the period
specified in that subsection ; or
(b) having entered into an agreement with the
Commissioner-General to pay the tax in default in
installments, has failed to pay any installment for
over thirty days,
the Commissioner-General shall issue a Notice of Default
on the defaulter and the amount due as tax in default shall
be recovered by action instituted in that behalf in a High
Court established for a Province under Article 154P of the
Constitution and which is empowered with civil jurisdiction,
by an Order made under section 2 of the High Court of the
Provinces (Special Provisions) Act, No. 10 of 1996.
Default Taxes (Special Provisions) 7
Act, No. 16 of 2010
11. The Commissioner-General may for the purpose of Commissioner-
any recovery of tax in default under this Act, by notice issued General to
in that behalf require any person to furnish such information request for
information.
within such period as shall be specified in such notice, and
it shall be duty of such person to furnish the information
requested for within the period so specified. Where however
the person is unable for whatever reasons to furnish the
information requested for, it shall be his duty to forthwith
inform the Commissioner-General of those reasons.
12. It shall be the duty of the Commissioner-General to Tax in arrears
ensure that the aggregate of any taxes, not including any not to exceed
penalty accrued thereon or any part of tax held over or certain
percentage.
deferred, which is in default under any law specified in the
Schedule to this Act as at the end of any calendar year
commencing on or after January 1, 2010, over the aggregate
of taxes in default as at the end of the immediately preceding
year, shall not exceed three per centum of the total tax
collected from the taxes levied and charged under the said
laws, in the immediately preceding year.
13. (1) Where the aggregate of taxes, not including any Commissioner-
penalty accrued thereon or any part of tax held-over or General to
deferred, which is in default under any law specified in the submit a report
where there is an
Schedule to this Act as at the end of any calendar year
excess.
commencing on or after January 1, 2010, over the aggregate
of taxes in default as at the end of the immediately preceding
year, exceeds three per centum of the total tax collected
from the taxes levied and charged under the said laws in the
immediately preceding year, the Commission-General shall
submit a report to the Minister within four months of the end
of that year, giving reasons for such excess and make
recommendations in regard to any remedial action that may
be adopted, to overcome such excess.
(2) In the event that the reasons given by the
Commissioner-General in his report submitted under
subsection (1) are accepted by the Minister, he shall request
the Commissioner-General to take all such steps as he shall
consider necessary, to give effect to the recommendations
made in the report submitted.
8 Default Taxes (Special Provisions)
Act, No. 16 of 2010
(3) Where the reasons given by the Commissioner-General
in his report submitted under subsection (1) is not accepted
by the Minister as being adequate to warrant such excess,
the Minister shall in writing require the Commissioner-
General to comply with the requirement imposed by that
subsection, within six months of the receipt of his
communication.
(4) Where the Commissioner-General fails to comply with
a request made under subsection (3) within the time
stipulated under that subsection, the Cabinet of Ministers
shall take such action against the Commissioner-General, as
it shall deem appropriate in the circumstances.
Secrecy. 14. Every members of the Committee shall, before
entering upon his duties as such member, sign a declaration
pledging to observe strict secrecy in respect of all matters
which has come to his knowledge in the discharge of the
functions of the Committee under section 4 of this Act and
shall by such declaration, pledge himself not to disclose
any such matter to anyone, except:—
(a) when required or called upon to do so by any court
of law ; or
(b) for the purpose of discharging his functions under
this Act.
The 15. The Commissioner-General may delegate to the
Commissioner- Senior Deputy Commissioner-General, any Deputy
General may
Commissioner-General, Senior Commissioner,
delegate his
function and Commissioner, Deputy Commissioner or an Assessor
powers under appointed or deemed to have been appointed under the
this Act. Inland Revenue Act, No. 10 of 2006, any of the functions or
powers conferred upon him by this Act.
Sinhala text to 16. In the event of any inconsistency between the
prevail in the
Sinhala and Tamil texts of this Act, the Sinhala text shall
event of any
inconsistency. prevail.
Default Taxes (Special Provisions) 9
Act, No. 16 of 2010
17. In this Act, unless the context otherwise requires:— Interpretation.
“Commissioner-General”, “Senior Deputy Commissioner-
General” “Deputy Commissioner-General”, “Senior
Commissioner”, “Commissioner”, “Deputy
Commissioner” and “Assessor”, shall have the same
meaning as given to those terms in the Inland
Revenue Act, No. 10 of 2006 ;
“defaulter” means any person whose tax is in default in
terms of the provisions of section 2 of this Act ; and
“Government Owned Business Undertaking” means a
business undertaking acquired by or vested in the
Government, under the Business Undertaking
(Acquisition) Act, No. 35 of 1971.
18. The First Schedule to the High Court of the Provinces Amendment of
(Special Provisions) Act, No. 10 of 1996, is hereby amended the First
Schedule to Act,
by the addition immediately after item (3) of that Schedule,
No. 10 of 1996.
of the following new item :—
“(4) Actions instituted under section 10 of the Default
Taxes (Special Provisions) Act, No. 16 of 2010.”.
SCHEDULE [Section 2]
1. Betting and Gaming Levy Act, No. 40 of 1988
2. Capital Levy Act, No. 51 of 1971
3. Debits Tax Act, No. 16 of 2002
4. Economic Service Charge Act, No. 13 of 2006
5. Estate Duty Act, No. 13 of 1980
6. Finance Act, No. 11 of 1963
7. Finance (Amendment) Act, No. 8 of 2004
8. Finance Act, No. 11 of 2004 – Part I
9. Finance Act, No. 5 of 2005 – Part I
10. Goods and Services Tax Act, No. 34 of 1996
11. Inland Revenue Act, No. 4 of 1963
10 Default Taxes (Special Provisions)
Act, No. 16 of 2010
12. Inland Revenue Act, No. 28 of 1979
13. Inland Revenue Act, No. 38 of 2000
14. Inland Revenue Act, No. 10 of 2006
15. National Security Levy Act, No. 52 of 1991
16. Profits Tax (Special Provisions) Act, No. 36 of 1964
17. Rice Subsidy Tax Act, No. 13 of 1967
18. Save the Nation Contribution Act, No. 5 of 1996
19. Stamp Duty Act, No. 43 of 1982
20. Surcharge on Wealth Tax Act, No. 25 of 1982
21. Surcharge on Income Tax Act, No. 26 of 1982
22. Surcharge on Income Tax Act, No. 12 of 1984
23. Surcharge on Income Tax Act, No. 7 of 1989
24. Surcharge on Wealth Tax Act, No. 8 of 1989
25. Surcharge on Income Tax (Amendment) Act, No. 17 of
1991
26. Surcharge on Income Tax (Amendment) Act, No. 32 of
1992
27. Surcharge on Income Tax (Amendment) Act, No. 28 of
1993
28. Surcharge on Income Tax (Amendment) Act, No. 23 of
1994
29. Surcharge on Income Tax (Amendment) Act, No. 13 of
1995
30. Surcharge on Income Tax Act, No. 6 of 2001
31. Turnover Tax Act, No. 69 of 1981
32. Value Added Tax Act, No. 14 of 2002

Default Taxes (Special Provisions) 11
Act, No. 16 of 2010
Annual subscription of English Bills and Acts of the Parliament Rs. 885 (Local), Rs. 1,180
(Foreign), Payable to the SUPERINTENDENT, GOVERNMENT PUBLICATIONS BUREAU, DEPARTMENT OF
GOVERNMENT INFORMATION, NO. 163, KIRULAPONA MAWATHA, POLHENGODA, COLOMBO 05 before 15th
December each year in respect of the year following.
NadunReplacecontEnd