ACT, No. 22 OF 2011

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PARLIAMENT OF THE DEMOCRATIC
SOCIALIST REPUBLIC OF
SRI LANKA
INLAND REVENUE (AMENDMENT)
ACT, No. 22 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. 37.00 Postage : Rs. 20.00

Inland Revenue (Amendment) Act, No. 22 of 2011 1
[Certified on 31st March, 2011]
L.D.—O. 12/2011.
AN ACT TO AMEND THE INLAND REVENUE ACT, NO. 10 OF 2006
BE it enacted by the Parliament of the Democratic Socialist
Republic Sri Lanka as follows:—
1. This Act may be cited as the Inland Revenue Short title
(Amendment) Act, No. 22 of 2011.
2. Section 4 of the Inland Revenue Act, No. 10 of 2006 Amendment of
(hereinafter referred to as the "Principal enactment") section 4 of the
Inland Revenue
as amended by Act, No. 10 of 2007, is hereby further Act,
amended in paragraph (c) of subsection (1) as follows:— No. 10 of 2006.
(1) by the substitution in sub-paragraph (ii), for the words
"his contributions to that fund;", of the words and
figures "his contributions to that fund, where such
retirement took place prior to April 1, 2011;"; and
(2) by the substitution in sub-paragraph (iii) (b), for
the words "such contribution and interest;", of the
following words and figures:—
"such contribution and interest,
where such employee retires from the employment
prior to April 1, 2011; ".
3. Section 7 of the principal enactment as last amended Amendment of
by Act, No. 19 of 2009, is hereby further amended as section 7 of the
principal
follows:—
enactment.
(1) in paragraph (b) of that section, by the addition
immediately after sub-paragraph (lx), of the
following new sub-paragraph:—
“(lxi) the profits and income of the Insurance
Board of Sri Lanka, established by the
2 Inland Revenue (Amendment) Act, No. 22 of 2011
Regulation of the Insurance Industry Act,
No. 43 of 2000." ;
(2) by the substitution in paragraph (e) of that section
for the words " the profits and income of a charitable
institution, of the words and figures" the profits
and income accruing prior to April 1, 2011, of a
charitable institution”;
(3) by the repeal of paragraph (h) of that section, and
substitution therefor, of the following paragraph:—
"(h) the profits and income of any registered
society within the meaning of the
Co-operative Societies Law, No. 5 of 1972 or
under the respective Statute enacted by a
Provincial Council providing for such
registration and the profits and income of Lak
Sathoosa Limited registered under the
Companies Act, No. 7 of 2007.";
(4) by the substitution in paragraph (i) of that section,
for the words and figures "Apiwenuwen Api Fund
Act, No. 6 of 2008.", of the words and figures
“Apiwenuwen Api Fund Act, No. 6 of 2008;";
(5) by the addition immediately after paragraph (i) of
that section, of the following new paragraphs:-
"(j) the profits and income for every year of
assessment within the period of ten years
commencing on April 1, 2011, of-
(i) Sri Lankan Airlines Limited;
(ii) Mihin Lanka (Pvt.) Limited;
(k) the profits and income for every year of
assessment within the period of five years
commencing on April 1, 2011, of –
(i) Ceylon Electricity Board;
Inland Revenue (Amendment) Act, No. 22 of 2011 3
(ii) National Water Supply and Drainage
Board;
(iii) Ceylon Petroleum Corporation;
(iv) Sri Lanka Ports Authority,
if, twenty five per centum of the gross profits of such
Board, Corporation or Authority, as the case may be,
for such year of assessment is paid as dividend to the
Government.".
4. Section 8 of the principal enactment as last amended Amendment of
by Act, No. 19 of 2009, is hereby further amended in section 8 of the
principal
subsection (1) as follows:— enactment
(1) by the substitution in paragraph (p), of that sub
section for the words "value of any benefits
accruing to”, of the words and figures" value of
any benefits accruing before April 1, 2011, to";
(2) in paragraph (q) of that subsection, by the
substitution in sub-paragraph (ii), for the words and
figures " the Merchant Shipping Act, No. 52 of
1971.", of the words and figures "the Merchant
Shipping Act, No. 52 of 1971; " and
(3) by the addition, immediately after paragraph (q) of
that subsection, of the following new paragraphs:-
(r) rental value of one place of residence
provided to any individual referred to in
paragraph (b) of subsection (1), rent free or at
a rent less than the rental value of such place;
(s) either the value of benefit from private use of
one motor vehicle provided by the employer
or any allowance paid in lieu of the provision
of such vehicle, subject to a maximum of fifty
thousand rupees for a calendar month;
4 Inland Revenue (Amendment) Act, No. 22 of 2011
(t) where the profits from employment of any
individual who is a citizen of Sri Lanka or
resident in Sri Lanka other than profits
referred to in paragraph (c) of subsection (1)
of section 4, exceeds five hundred thousand
rupees, then-
(i) such part of such profits in excess of
five hundred thousand rupees; or
(ii) one hundred thousand rupees,
whichever is lower;
(u) any special payment made to any
individual or holder of office, referred to
in paragraph (b) of subsection (1) for
emergency or priority services or for any
special task rendered or carried out by such
individual;
(v) official emoluments arising in Sri Lanka
to any non-citizen individual from the
participation in any international event
conducted in Sri Lanka;
(w) such part of official emoluments as does
not exceed one hundred thousand rupees,
arising in Sri Lanka to any individual who
is not a citizen of Sri Lanka and not
resident in Sri Lanka.”.
Amendment of 5. Section 9 of the principal enactment as last amended
section 9 of the
by Act, No. 19 of 2009, is hereby further amended in
principal
enactment. paragraph (h) of that section, by the substitution for the words
"such part of any interest as does not exceed two hundred
thousand rupees accruing or arising in any year of assessment
Inland Revenue (Amendment) Act, No. 22 of 2011 5
to any individual", of the words and figures "such part of any
interest as does not exceed-
(i) two hundred thousand rupees accruing for,
or arising in, any year of assessment ending
prior to April 1, 2011; and
(ii) five hundred thousand rupees accruing for,
or arising in, any year of assessment
commencing on or after April 1, 2011,
to any individual".
6. Section 13 of the principal enactment as last Amendment of
amended by Act, No. 19 of 2009, is hereby further amended section 13 of the
principal
as follows:- enactment.
(1) by the substitution in sub-paragraph (i) of
paragraph (b) of that section, for the words
"services relating to any construction project;
and", of the words "services relating to any
construction project;";
(2) by the substitution in sub-paragraph (ii) of
paragraph (b) of that section, for the words "any
goods imported into Sri Lanka,'', of the following
words and figures:-
"any goods imported into Sri Lanka; and
(iii) in respect of any business of exporting any
goods, being goods which were brought to
Sri Lanka on a consignment basis, and
re-exported without subjecting such goods
to any process or manufacture, other than
the repacking or labeling of such goods in
the preparation to the market,'';
6 Inland Revenue (Amendment) Act, No. 22 of 2011
(3) by the insertion immediately after paragraph
(b) of that section, of the following new
paragraph:-
“(bb) the profits and income earned in foreign
currency by any manufacturer of textile,
leather products, footwear or bags, from
supplies made to any foreign buyer who
has established his headquarters in
Sri Lanka for management, finance, supply
chain and billing;'';
(4) by the substitution in paragraph (ddd) of that
section, for all the words commencing from "from
services rendered in or outside Sri Lanka," to
"the national economy of Sri Lanka, ", of the
words "from any service rendered in or outside
Sri Lanka to any person or partnership outside
Sri Lanka, other than any commission, discount
or similar receipt for any such service rendered in
Sri Lanka,'';
(5) by the insertion immediately after paragraph
(xxxxx) of that section, of the following new
paragraph:-
"(xxxxxx) (i) an amount equal to the interest
payable to any bank or other financial
institution in Sri Lanka, in respect of
any loan granted out of the moneys
lying into the credit of the Investment
Fund account of such bank or
institution, maintained and operated
in accordance with the guidelines set
by the Central Bank; or
(ii) an amount equal to the interest payable
to any bank or other financial
Inland Revenue (Amendment) Act, No. 22 of 2011 7
institution in Sri Lanka, in respect of
any loan granted-
(A) to any company for investing in
full in an undertaking referred to
in section 17C;
(B) to any person or partnership for
investing in full for the operation
of re-opened abandoned factory.
In this paragraph "re-opened abandoned
factory'' means a factory which was
engaged in the production or manufacture
of any commodity or article but which had
not been so engaged for an unbroken
period of not less than three years,
preceding November 22, 2010, and which
commences the production or manufacture
of such commodity or article or any other
commodity or article in commercial
quantities before April 1, 2012.'';
(6) by the insertion, immediately after paragraph (yyy) of
that section, of the following new paragraphs:-
"(yyyy) the profits and income arising or accruing
to any person from any undertaking for
the operation of any port terminal in
Sri Lanka;
(yyyyy) the profits and income from any service
rendered by any person or partnership in
any port in Sri Lanka in the course of any
business carried on within such port;''; and
(7) by the insertion, immediately after paragraph (zzzz)
of that section, of the following new paragraph:-
"(zzzzz) the profits and income arising or
accruing to any person from any
undertaking for the construction of any
Port in Sri Lanka.''.
8 Inland Revenue (Amendment) Act, No. 22 of 2011
Insertion of new 7. The following new sections are inserted immediately
sections 16A, 16B
after section 16 of the principal enactment and shall have
and 16C in the
principal effect as section 16A, section 16B and section 16C respectively,
enactment. of that enactment:—
"Exemption 16A . (1) The profits and income within the
from income meaning of paragraph (a) of section 3, other
tax of the
profits and than any profits and income from the disposal
income of of any capital asset, of any person or partnership
any from any undertaking for fishing carried on in
undertaking Sri Lanka, shall be exempted from income tax
for fishing.
for each year of assessment within the period of
five years commencing on April 1, 2011.
(2) In this section "undertaking for fishing''
includes any undertaking for the cleaning,
sizing, sorting, grading, chilling, dehydrating,
packaging, cutting or canning of fish in
preparation of such produce for the market.
(3) In relation to an undertaking which
consists of fishing and utilizing such fish for
manufacturing of any product, such fish shall
be deemed to have been sold for the
manufacture of such product at the open market
price prevailing at the time of such deemed
sale, and the exemption granted under
subsection (1) shall be applicable to that
undertaking, on the profits and income
computed on the basis of such deemed sale.
Exemption 16B. (1) The profits and income within the
from income meaning of paragraph (a) of section 3, other
tax of the
profits and than any profits and income from the disposal
income of of any capital asset, of any person or partnership
any under- from any undertaking for producing of
taking for agricultural seeds or planting materials, or
producing
primary processing of such seeds or materials,
agricultural
seeds or shall be exempted from income tax for each
planting year of assessment within the period of five
materials. years, commencing on April 1, 2011.
Inland Revenue (Amendment) Act, No. 22 of 2011 9
(2) In this section "primary processing'' means
cleaning, sizing, sorting, grading, chilling,
dehydrating, cutting, canning or packaging for
the purpose of preparation of such produce for
the market.
(3) In relation to an undertaking which
consists of producing of agricultural seeds or
planting materials and utilizing such seeds or
materials in the agriculture or horticulture, such
produce shall be deemed to have been sold for
such purpose at the open market price prevailing
at the time of such deemed sale, and the
exemption granted under subsection (1) shall
be applicable to that undertaking, on the profits
and income computed on the basis of such
deemed sale.
Exemption 16C. (1) The profits and income within the
from income
meaning of paragraph (a) of section 3 (other
tax of the
profits and than any profits and income from the sale of
income of any capital asset) of any new undertaking
any new referred to in subsection (2), and carried on by
undertaking any person or partnership on or after April 1,
investing not
2011, shall be exempted from income tax for a
less than
fifty million period of three years reckoned from the
rupees. commencement of the year of assessment in
which such undertaking commences to make
profits from transactions entered into in that
year of assessment, or from the commencement
of the year of assessment immediately
succeeding the year of assessment in which the
undertaking completes a period of two years
reckoned from the date on which the
undertaking commences to carry on commercial
operations, whichever occurs earlier.
(2) For the purpose of subsection (1), "new
undertaking'' means an undertaking-
(a) which is engaged in the manufacture
of any article other than any liquor or
tobacco product;
10 Inland Revenue (Amendment) Act, No. 22 of 2011
(b) in which the sum invested in the
acquisition of fixed assets after
November 22, 2010 but before March
31, 2012 is not less than fifty million
rupees; and
(c) which commences commercial
operations on or after April 1, 2011.''.
Amendment of 8. Section 17 of the principal enactment as last amended
section 17 of the by Act, No. 19 of 2009, is hereby further amended in
principal
subsection (2) of that section, by the substitution in sub-
enactment.
paragraph (ii) of paragraph (a), for the words and figures
"incorporated on or after April 1, 2002,”, of the words and
figures "incorporated on or after April 1, 2002, but prior to
April 1, 2011,''.
Insertion of new 9. The following new section is hereby inserted
section 17A in immediately after section 17 of the principal enactment and
the principal
shall have effect as section 17A of that enactment:-
enactment.
"Exemption 17A. (1) The profits and income within the
from income meaning of paragraph (a) of section 3 (other
tax of the
than any profits and income from the sale of
profits and
income from any capital asset) of any company from any
any new new undertaking referred to in subsection (2),
undertaking and carried on by such company on or after
engaged in April 1, 2011, shall be exempted from income
any pre-
tax for a period of five years reckoned from the
scribed
activities. commencement of the year of assessment in
which such undertaking commences to make
profits from transactions entered into in that
year of assessment or from the commencement
of the year of assessment immediately
succeeding the year of assessment in which such
undertaking completes a period of two years
reckoned from the date on which such
undertaking commences to carry on commercial
operations, whichever occurs earlier:
Provided that where the quantum of
investment made in such undertaking is more
than United State Dollars three million or its
Inland Revenue (Amendment) Act, No. 22 of 2011 11
equivalent, the Minister may, having regard to
the economic development of the country, grant
tax exemption on the same basis, for a period
not exceeding seven years.
(2) For the purpose of subsection (1), "new
undertaking'' means an undertaking engaged
in any activity prescribed by the Minister
having regard to the development of the
national economy, as needed for the economic
development of the country and which shall be
with an investment of not less than United State
Dollars three million or equivalent in other
currencies invested in fixed assets.''.
10. Section 20 of the principal enactment as amended by Amendment of
the Act, No. 9 of 2008, is hereby further amended in section 20 of the
principal
subsection (2) of that section as follows:-
enactment.
(1) by the substitution in paragraph (c) of that subsection,
for the words and figures "April 1, 2009-'', of the words
and figures "April 1, 2010-''; and
(2) by the substitution in paragraph (e) of that subsection,
for the words and figures "prior to April 1, 2009", of
the words and figures "prior to April 1, 2010".
11. Section 21 of the principal enactment as amended by Amendment of
section 21 of the
Act, No. 9 of 2008, is hereby further amended in paragraph
principal
(b) of subsection (2) of that section, by the substitution for enactment.
the words and figures "not later that March 31, 2009,", of the
words and figures "not later than March 31, 2010,".
12. Section 21A of the principal enactment is hereby Amendment of
amended in paragraph (b) of subsection (2) of that section, section 21A of
the
by the substitution for the words and figures "not later than
principal
March 31, 2009, of the words and figures "not later than enactment.
March 31, 2010".
13. Section 23 of the principal encatment as last amended Amendment of
by Act, No. 9 of 2008, is hereby further amended in subsection section 23 of
the principal
(1) of that section by the substitution in the further proviso enactment.
12 Inland Revenue (Amendment) Act, No. 22 of 2011
to that subsection, for the words "be three years.", of the
following :-
“be three years.
Provided further that where any venture capital company
had not made any investment prior to April 1, 2011 for
the purchase of ordinary shares in any project referred
to in paragraph (a), (b) or (c) of this subsection, such
company shall not be entitled to any tax exemption under
this section.".
Amendment of 14. Section 25 of the principal enactment as last amended
section 25 of the by Act No. 19 of 2009, is hereby further amended in
principal
subsection (1) of that section as follows:-
enactment.
(1) in paragraph (a) of that subsection-
(a) by the substitution in sub-paragraph (iii), for
the words "sub-paragraph (v), acquired or
assembled by such person, at the rate of twelve
and one half per centum on the cost of
acqusition or assembly;", of the following words
and figures:-
"sub-paragraph (iv)-
(A) acquired or assembled prior to April 1,
2011 by such person, at the rate of
twelve and one half per centum per
annum; or
(B) acquired or assembled on or after April
1, 2011 by such person, at the rate of
thirty three and one third per centum
per annum,
on the cost of acquistition or assembly;";
(b) in sub-paragraph (v) of that paragraph by
the substitution for the words "any qualified
building" of the words and figures
"any qualified building constructed prior to
April 1, 2011,";
Inland Revenue (Amendment) Act, No. 22 of 2011 13
(c) by the insertion immediately after sub-
paragraph (v) of that paragraph, of the
following new sub-paragraph:-
"(vi) any qualified building constructed on
or after April 1, 2011, at the rate of ten
per centum, on the cost of construction;";
(d) in paragraph (b) of the proviso to that paragraph-
"(i) in sub-paragraph (i), by the substitution for the
words "machinery acquired is used in any
business", of the words and figures "machinery
acquired prior to April 1, 2011, is used in any
business"; and
(ii) in sub-paragraph (ii), by the substitution for
the words and figures "acquired on or after April
1, 2007, being a ship", of the words and figures
"acquired on or after April 1, 2007, but prior to
April 1, 2011, being a ship";
(2) by the subsitution in paragraph (i) of that subsection,
for the words " the expenditure, including capital
expenditure incurred by such person", of the following
words and figures:-
"for any year of assessment-
(i) commencing prior to April 1, 2011, the
expenditure including capital expenditure; or
(ii) commencing on or after April 1, 2011, an
amount equal to two hundred per centum of
the expenditure, including capital
expenditure,
incurred by such person";
(3) in paragraph (r) of that subsection, by the substitution
for the words "carrying on any profession,", of the
words "carrying on any profession;"; and
14 Inland Revenue (Amendment) Act, No. 22 of 2011
(4) by the addition, immediately after paragraph (r) of
that subsection, of the following new paragraph:-
"(s) any expenditure incurred in any year of
assessement in quoting any shares of a company
in any official list of any stock exchange
licensed by the Securities and Exchange
Commission of Sri Lanka, provided that the
aggregate of such expenditure incurred in that
year if assessment and in any previous year of
assessment shall not exceed one per centum of
the value of the Initial Public Offering of Such
company.",
Amendment of 15. Section 26 of the principal enactment as last
section 26 of the amended by Act, No. 9 of 2008, is hereby further amended in
principal
subsection (1) as follows:-
enactment.
(1) by the substitution in sub-paragraph (ii) of paragraph
(c) of that subsection, for the words "in foreign
currency;", of the following words and figures :-
“in foreign currency:
Provided that for any year of assessment
commencing on or after April 1, 2011 –
(A) such part of expenditure incurred in
travelling outside Sri Lanka in the
production of profits or income from
any trade or business carried on or
exercised in Sri Lanka by any person,
other than-
(i) such expenses incurred solely in
connection with the promotion
of export trade of any article or
goods or the provision of any
services for payment in foreign
currency ; or
(ii) such expenditure incurred in
carrying out an approved
programme as referred to in
paragraph (d); or
Inland Revenue (Amendment) Act, No. 22 of 2011 15
(B) an amount equal to two per centum of
the profits and income of such trade or
business in the immediately preceding
year of assessment;”;
whichever is lower, shall be deductible
in ascertaining the profits and income
from such trade or business for that year
of assessment;”;
(2) by the substitution in sub-paragraph (i) of paragraph
(r) of that subsection for the words “one million rupees
or”, of the words “two million rupees or”;
(3) by the substitution in paragraph (v) of that
subsection, for the words “one half of such person’s
cost of advertisement”, of the following words and
figures:-
“for any year of assessment-
(i) commencing prior the April 1, 2011, one half;
and
(ii) commencing on or after April 1, 2011, one
fourth,
of such person’s cost of advertisement”;
(4) by the substitution in paragraph (y) of that subsection,
for the words “debt instrument.”, of the words “debt
instruments;”; and
(5) by the addition immediately after paragraph (y) of
that subsection, of the following new paragraph:-
“(z) the income tax paid by any employer in respect
of the employment income of any individual
employed by such employer.”.
16 Inland Revenue (Amendment) Act, No. 22 of 2011
Amendment of 16. Section 32 of the principal enactment as last
section 32 of the amended by Act, No. 9 of 2008, is hereby further amended as
principal
follows:-
enactment.
(1) in subsection (3) of that section-
(a) by the substitution in paragraph (g), for the words
“Sri Lanka currency for such purchase; and”, of
the words “Sri Lanka currency for such purchase;”;
(b) by the substitution in paragraph (h), for the words
and figures “section 161A of this Act.”, of the
words and figures “section 161A of this Act;
and”;and
(c) by the addition immediately after paragraph (h) of
that subsection, of the following new paragraph:-
“(i) profits from any employment, other than profits
referred to in paragraph (c) of subsection (1)
section 4, from which income tax is deducted
by the employer under section 114 and such
person being an individual has no other income
other than any income referred to in this section
as not forming part of assessable income of
such individual.”.
(2) in subsection (5) of that section, by the addition
immediately after sub-paragraph (iv) of the proviso
to paragraph (a) of that subsection, of the folowing
new sub-paragraph:—
“(v) no deduction under this section shall be made
from any employment income included in the
total statutory income;".
Amendment of 17. Section 33 of the principal enactment is hereby
section 33 of the amended in subsection (1) of that section, as follows:-
principal
enactment.
(1) by the substitution in paragraph (a) of that subsection
for the words “an allowance of three hundred
Inland Revenue (Amendment) Act, No. 22 of 2011 17
thousand rupees; and”, of the following words and
figures:-
“an allowance of-
(i) three hundred thousand rupees in respect of
any year of assessment commencing prior to
April 1, 2011; and
(ii) five hundred thousand rupees in respect of
any year of assessment commencing on or
after April 1, 2011, and”;
(2) by the substitution in the proviso to that subsection,
for the words ‘as such trustee, receiver, executor or
liquidator.”, of the following words and figures :-
“as such trustee, receiver, executor or liquidator:”
Provided further, that for any year of
assessment commencing on or after April 1, 2011—
(i) any individual being a citizen of Sri Lanka
irrespective of whether such individual is
resident in Sri Lanka or not, shall be entitled
to deduct the allowance referred to in
paragraph (a); and
(ii) an individual shall not be entitled to deduct
any part of any allowance under section 34
from any employment income which is
included in such assessable income.”.
18. Section 34 of the principal enactment as last amended Amendment of
by Act, No. 19 of 2009, is hereby further amended as section 34 of
the
follows:—
principal
enactment.
(1) in subsection (2) of that section-
(a) by the substitution in paragraph (a), for the words
“made by any person in money to an approved
charity;”, of the words “made by any person in
money to an approved charity being a charity
which is established for the provision of
institutionalized care for the sick or the needy;”;
18 Inland Revenue (Amendment) Act, No. 22 of 2011
(b) by the substitution in paragraph (d), for the words
“amount paid by an individual as a contribution”,
of the words and figures “amount paid prior to
April 1, 2011, by an individual as a contribution”;
(c) by the substitution in paragraph (e), for the words
“contribution made by an individual”, of the words
and figures “contribution made prior to April 1,
2011, by an individual”;
(d) by the substitution in paragraph (f), for the words
“donation made by any person”, of the words and
figures “donation made prior to April 1, 2011, by
any person”;
(e) by the substitution in sub-paragraph (ii) of
paragraph (g), for the words "policy of medical
insurance,", of the following words and figures:-
“policy of medical insurance other than any
policy referred to in paragraph (gg),”;
(f) by the insertion immediately after paragraph (g)
of that subsection, of the following new
paragraph:-
“(gg) any premia in any year of assessment
commencing on or after April 1, 2011, being
pemia which have accrued due for payment
on a policy of special health insurance
which covers any incurable disease”;
(g) by the substitution in paragraph (i), for the words
“any expenditure incurred”, of the word and
figures “any expenditure incurred prior to April
1, 2011”; and
(h) by the substitution in paragraph (j), for the words
“any expenditure incurred”, of the words and
figures “any expenditure incurred prior to April
1, 2011”; and
(2) in subsection (4) of that section, by the substitution
in sub-paragraph (i) of paragraph (a), for the words
“paragraphs (a), (b), (c), (e), (g), (h)”, of the words
“Paragraphs (a), (b), (c), (e), (g), (gg), (h)”.
Inland Revenue (Amendment) Act, No. 22 of 2011 19
19. Section 42 of the principal enactment as amended Amendment of
section 42 of
by Act, No. 10 of 2007 is hereby further amended in
the
subsection (2) of that section by the substitution for the principal
words “arising in Sri Lanka”, of the words and figures “but enactment.
prior to April 1, 2011 arising in Sri Lanka”.
20. Section 45 of the principal enactment as amended Amendment of
by Act, No. 10 of 2007 is hereby further amended in section 45 of the
principal
subsection (1) thereof, by the insertion immediately after enactment.
paragraph (a), of the following new paragraph:-
“(aa) undertaking for the manufacture of animal feed;”.
21. Section 46 of the principal enactment as amended Amendment of
section 46 of the
by Act, No. 9 of 2008 is hereby further amended in subsection principal
(1) thereof, by the insertion immediately after paragraph (a), enactment.
of the following new paragraph:-
“(aa) undertaking for the manufacture of animal feed;”.
22. Section 47 of the principal enactment is hereby Amendment of
amended in subsection (1) of that section, by the substitution section 47 of the
principal
for the words “any year of assessment includes”, of the words enactment.
and figures “any year of assessment commencing prior to
April 1, 2011 includes”.
23. The following new section is hereby inserted Insertion of new
section 48A in
immediately after section 48 of the principal enactment and
the principal
shall have effect as section 48A of that enactment:- enactment.
“Rate of 48A. Such part of the profits and income from
income tax
any agricultural undertaking referred to in
after the
expiry of tax section 16, included in the taxable income of
exemption any person for any year of assessment
under section commencing on or after April 1, 2011 shall,
16.
notwithstanding anything to the contrary in
any other provisions of this Act, be taxable at
the appropriate rate specified in the Fifth
Schedule to this Act.”.
20 Inland Revenue (Amendment) Act, No. 22 of 2011
Insertion of new 24. The following new sections are hereby inserted
sections 59A and immediately after section 59 of the principal enactment and
59B in the
principal shall have effect as sections 59A and 59B respectively, of
enactment. that enactment:-
“Rate of 59A. Such part of the profits and income of
income tax any person for any year of assessment
on the profits
commencing on or after April 1, 2011 from an
from the
export or undertaking for the manufacture of any product
supply to an for export, or for supply to an exporter for
exporter of export, being a product having domestic value
certain
addition in excess of sixty five per centum and
product
having Sri Lankan brand name with patent rights
domestic reserved in Sri Lanka, shall notwithstanding
value anything to the contrary in any other provisions
addition over
of this Act, be chargeable with income tax at
sixty five per
centum. the appropriate rate specified in the Fifth
Schedule to this Act.
Rate of 59B. (1) The profits and income of any person
income tax for any year of assessment commencing on or
applicable to
any after April 1, 2011, from any undertaking
undertaking referred to in subsection (2) shall,
with annual notwithstanding anything to the contrary in
turnover not any other provisions of this Act, be chargeable
exceeding
three with income tax at the appropriate rate specified
hundred in the Fifth Schedule to this Act-
million
rupees. (2) For the purpose of this section
“undertaking” in relation to any year of
assessment means any undertaking-
(a) engaged in the manufacture of any
article or in the provision of any
service; and
(b) the turnover of such undertaking (other
than from the sale of any capital asset)
for that year of assessment does not
exceed three hundred million rupees.”.
Inland Revenue (Amendment) Act, No. 22 of 2011 21
25. Section 61 of the principal enactment as last Amendment of
amended by Act, No. 9 of 2008, is hereby further amended in section 61 of the
principal
subsection (1) of that section as follows :-
enactment.
(1) by the substitution in paragraph (a) of that
subsection, for the words “Second Schedule to
this Act;”, of the words “Second Schedule or Fifth
Schedule to this Act, as the case may be;”;
(2) in paragraph (b) of that subsection-
(a) by the substitution in sub-paragraph (ii) of
that paragraph for the words “where such
company has within such period distributed
dividends less in amount than twenty five
per centum of the distributable profits for
that preceding year:”, of the following words
and figures:-
“(A) where such year of assessment is any
year of assessment commencing prior to
April 1, 2011 and the company has
within such period distributed dividends
less in amount than twenty five per
centum; or
(B) where such year of assessment is any
year of assessment commencing on or
after April 1, 2011, and the company has
within such period distributed dividends
less in amount than ten per centum,
of the distributable profits for that preceding
year:”; and
(b) by the substitution in the proviso to sub-
paragraph (ii), for the words “company has
distributed twenty five per centum of its
distributable profits”, of the following words
and figures :-
“company has distributed-
(A) twenty five per centum, where such year
of assessment is any year of assessment
commencing prior to April 1, 2011; or
22 Inland Revenue (Amendment) Act, No. 22 of 2011
(B) ten per centum, where such year of
assessment is any year of assessment
commencing on or after April 1, 2011,
of its distributable profits”.
Amendment of 26. Section 78 of the principal enactment as last
section 78 of the amended by Act, No. 19 of 2009, is hereby further amended
principal
in subsection (3) of that section by the substitution for the
enactment.
words, “using the profit sharing ratio of the partnership”, of
the words “using the ratio of shares of profits inclusive of
any salary from such partnership”.
Amendment of 27. Section 95 of the principal enactment as amended
section 95 of the by Act, No. 9 of 2008, is hereby further amended in
principal
subsection (1) of that section as follows :-
enactment.
(1) by the substitution in paragraph (aa) of the proviso
to that subsection, for the words “rate of ten per
centum; and”, of the words “rate of ten per centum;”
and
(2) by the insertion immediately after paragraph (aa)
of that proviso, of the following new paragraph:-
“(aaa) no deduction shall be made under this
section from any interest which is exempt
from income tax under any provision of this
Act; and”.
Insertion of new 28. The following new sub-heading and new section
sub heading and are hereby inserted immediately after section 105 in Chapter
new section
XI of the principal enactment and the section shall have
105A in Chapter
XI of the effect as section 105A of that enactment:-
principal
enactment. “M – ISLAMIC FINANCIAL TRANSACTIONS.
Profits and 105A. (1) The profits and income arising
income from any Islamic financial transaction relating
arising from to any Islamic financial instrument shall be
Islamic
treated for tax purposes under the provisions
financial
transactions of the Act, as hereinafter provided in this
are taxed. section.
Inland Revenue (Amendment) Act, No. 22 of 2011 23
(2) The Profits and income arising to any
person or partnership out of any Islamic
financial transaction shall, where such
transaction is similar or equivalent in
substance, to any conventional financial
transaction under the provisions of the Act, be
subject to tax in similar manner as such
conventional financial transaction is taxed
under the Act.
(3) 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 profit and income
arising out of any Islamic financial
transaction.”.
29. Section 106 of the principal enactment as last Amendment of
amended by Act, No. 19 of 2009, is hereby further amended section 106 of
the principal
as follows:-
enactment.
(1) in subsection (1) of that section, by the substitution
in sub-paragraph (c) of the proviso, for the words and
figures “deducted under section 133, section 134 or
section 135, as the case may be.”, of the words and
figures “deducted under section 133, section 134 or
section 135, as the case may be:
Provided further, that for any year of assessment
commencing on or after April 1, 2011, the preceding
provisions shall not apply to an individual being an
employee who has no any other income chargeable
with income tax other than any income referred to in
sub-paragraph (b) or sub-paragraph (c).”;
24 Inland Revenue (Amendment) Act, No. 22 of 2011
(2) by the repeal of subsection (11) of that section and
substitution therefor, of the following subsection:-
“(11) Where any person or partnership carries on
or exercises any trade, business, profession or
vocation in several units or undertakings as one
trade, business, profession or vacation, as the case
may be, or where such person or partnership carries
on or exercises more than one trade, business,
profession or vocation and the profits and income
from any such unit or undertaking or from such trade,
business, profession or vocation is exempted from or
chargeable with income tax at different rates, such
person or partnership shall maintain and prepare
statements of account in a manner that the profits and
income from each such unit or undertaking or such
trade, business, profession or vocation as the case
may be, may be separately identified.”; and
(3) by the addition at the end of subsection (18) of that
section, of the following new subsection:-
“(19) The Commissioner-General may close any
record maintained by him of any individual subsisting
on or after April 1, 2011 if he is satisfied on application
made by such individual, that all profits and income
of such individual are derived only from sources from
which whose taxes are paid at sources and such taxes
are treated as final.”.
Amendment of 30. Section 117 of the principal enactment is
section 117 of hereby amended in subsection (1) of that section by the
the principal
substitution for the words “deduct tax at the rate of
enactment.
ten per centum on such amounts or value of such benefits,
in terms of the provisions of this Chapter.”, of the following
words:-
“deduct tax on such amounts or value of such benefits
at the rate of —
(a) ten per centum, where the aggregate of such
amounts or value of such benefits does not
Inland Revenue (Amendment) Act, No. 22 of 2011 25
exceed twenty five thousand rupees per
month; or
(b) sixteen per centum, where the aggregate of
such amounts or value of such benefits exceeds
twenty five thousand rupees per month,
in terms of the provisions of this Chapter.”.
31. The following new section is hereby inserted Insertion of new
immediately after section 117 of the principal enactment section 117A in
the principal
and shall have effect as section 117A of that Act :-
enactment.
"Deduction 117A.(1) Where an employer pays any
of tax at remuneration or provides any benefit to any
special rates
where an employee who is also an employee of another
individual employer and such other employer deducts
has more income tax on the remuneration under section
than one 114 as such employee’s main employer, then
employment.
such first mentioned employer shall deduct tax
at the rate of —
(a) ten per centum, where the aggregate
of such payments or value of such
benefits does not exceed twenty five
thousand rupees per month; or
(b) sixteen per centum, where the
aggregate of such payments or value of
such benefits exceeds twenty five
thousand rupees per month,
on such payments or the value of such
benefits in terms of the provisions of this
Chapter. No direction shall be issued or
entertained under section 118 in relation to
such payments or value of such benefits.
(2) No refund shall be made under this Act
in relation to the income tax deducted in terms
of subsection (1) notwithstanding anything to
26 Inland Revenue (Amendment) Act, No. 22 of 2011
the contrary in this Act, but such income tax
may be set off against the income tax liability
of such person in respect of the same year of
assessment, if such payments or the value of
such benefits has been included in his total
statutory income for that year.
(3) Where any employer who is required to
deduct tax on any remuneration using tax
tables as referred to in section 116 omits to do
so, and deducts tax at the rate of ten per centum
on such remuneration, such employer shall be
liable to pay such tax in default calculated on
the basis of the difference between tax payable
on this basis of tax tables as provided for in
section 116 and tax deducted by the employer
under this section.”.
Amendment of 32. Section 118 of the principal enactment is hereby
section 118 of amended in subsection (1) of that section by the substitution
the principal
enactment for the words “if the amount of income tax payable by
him for any year of assessment” to “in excess of the amount
that should have been deducted ”, of the words and figures
“if such remuneration, in full or part, is exempted from
income tax for any year of assessment under any provisions
of this Act,”.
Amendment of 33. Section 131 of the principal enactment as last
section 131 of amended by Act No. 9 of 2008, is hereby further amended in
the principal
enactment the definition of the term “employer”, by the substitution for
the words “ body of persons or any organization, other than
any Government Institution referred to in Chapter XV :-”, of
the words “body of persons or any organization -”.
Amendment of 34. Section 132A of the principal enactment is
section 132A of hereby amended in subsection (1) of that section, by the
the principal
substitution for the words and figures “year of assessment
enactment.
commencing on or after April 1, 2008, by any employee”, of
the words and figures “ year of assessment commencing on
or after April 1, 2008, but prior to April 1, 2011, by any
employee”.
Inland Revenue (Amendment) Act, No. 22 of 2011 27
35. Section 133 of the principal enactment as last Amendment of
amended by Act, No. 19 of 2009, is hereby further amended section 133 of
the principal
in subsection (4) of that section as follows :-
enactment.
(1) by the substitution for paragraph (a) of that
subsection, of the following new paragraph:—
“(a) (i) any company other than any charitable
institution, the deduction shall be made at
the rate of ten per centum of such interest;
and
(ii) any partnership or body of persons other
than any charitable institution, the
deduction shall be made at the rate of eight
per centum of such interest;”;
(2) in paragraph (b) of that subsection –
(a) in sub-paragraph (i) thereof, by the
substitution for the words and figures “not
exceed 300,000 rupees”, of the words and
figures “not exceed 500,000 rupees”; and
(b) by the substitution for sub-paragraph (ii)
thereof, of the following sub-paragraph:-
“(ii) exceeds 500,000 rupees, deduction
shall be made from the interest
payable to charitable institutions at
the rate of eight per centum of such
interest for that year of assessment;”;
(3) in paragraph (c) of that subsection –
(a) in sub-paragraph (i) thereof, by the
substitution for the words and figures “not
exceed 300,000 rupees”, of the words and
figures “not exceed 500,000 rupees”;
(b) in sub-paragraph (ii) thereof, by the
substitution for the words and figures
“exceeds 300,000 rupees but does not
exceed 1,000,000 rupees,” , of the words
and figures “exceeds 500,000 rupees but
does not exceed 1,500,000 rupees,”; and
28 Inland Revenue (Amendment) Act, No. 22 of 2011
(c) in sub-paragraph (iii) thereof, by the
substitution for the words and figures
“exceeds 1,000,000 rupees” and “at the rate
of ten per centum”, respectively, of the
words and figures “exceeds 1,500,000
rupees” and “at the rate of eight per
centum”, respectively; and
(4) in paragraph (d) of that section, by the substitution
for the words “ten per centum of such interest:”,
of the words “eight per centum of such interest:”.
Amendment of 36. Section 135 of the principal enactment as amended
section 135 of by Act, No. 10 of 2007, is hereby further amended in
the principal
subsection (1) of that section, by the substitution for the
enactment.
words “ at the time such interest is paid or credited or such
discounts is allowed.” of the words “at the time of the issue
of such corporate debt security.”.
Repeal of 37. Section 151 of the principal enactment is hereby
section 151 of repealed.
the principal
enactment.
Amendment of 38. Section 153 of the principal enactment as last
section 153 of amended by Act, No. 19 of 2009 , is hereby further amended
the principal
in subsection (1) of that section, for the words “ any specified
enactment.
fee payable to any person”, of the words and figures “ any
specified fee payable and paid prior to April 1, 2011, to any
person.”
Amendment of 39. Section 155 of the principal enactment as last
section 155 of amended by Act, No. 9 of 2008 , is hereby further amended
the principal
by the substitution for the words “ person or partnership
enactment.
paying any rent, lease rent or such other payment,”, of the
words and figures “person or partnership paying on or before
April 1, 2011, any rent lease rent or such other payment,”.
Amendment of 40. Section 160 of the principal enactment as amended
section 160 of by Act, No. 9 of 2008 , is hereby further as follows:-
the principal
enactment. (1) by the substitution in paragraph (b), for the words
“management fee or other similar payment,”, of the
words “management fee,”;
Inland Revenue (Amendment) Act, No. 22 of 2011 29
(2) by the substitution for the words “royalty,
management fee or such other similar payment,”,
of the words “royalty or management fee,”; and
(3) by the substitution in item (ii) for the words
“management fee paid or any other similar payment
made:”, of the words “management fee paid:”.
41. Section 163 of the principal enactment as last Amendment of
section 163 of
amended by Act, No. 19 of 2009 , is hereby further amended
the principal
in subsection (5) as follows:- enactment.
(1) by the substitution in paragraph (a), for the words
“from the end of that year of assessment:”, of the
words “from the thirtieth day of November of the
immediately succeeding year of assessment:”; and
(2) by the substitution in paragraph (b) for the words
“from the end of that year of assessment,” of the
words “from the thirtieth day of November of the
immediately succeeding year of assessment:”.
42. Section 166 of the principal enactment as amended Amendment of
section 166 of
by Act, No. 10 of 2007 , is hereby further amended in
the principal
subsection (1) of that section, by the substitution for the enactment.
words “ For the purpose of hearing appeals in the manner
hereinafter provided, there shall be a Board of Review”, of
the words and figures “For the purpose of hearing appeals
made before April 1, 2011, in the manner hereinafter
provided, there shall be a to the Board of Review”.
43. Section 167 of the principal enactment is hereby Amendement of
amended in subsection (3) of that section, by the substitution section 167 of
the principal
for the words “ within one month of the transmission by the enactment.
Commissioner-General under subsection (2), of his reason
for determination, by petition in writing”, of the words and
figures “within one month of the transmission by the
Commissioner-General under subsection (2), of his reason
for determination, but not later than April 1, 2011, by petition
in writing”.
30 Inland Revenue (Amendment) Act, No. 22 of 2011
Amendment of 44. Section 168 of the principal enactment is hereby
section 168 of amended by the substitution for the words “to the Board of
the
principal Review,”, of the words and figures “to the Board of Review
enactment. before April 1, 2011,”.
Amendment of 45. Section 170 of the principal enactment is hereby
Section 170 of amended as follows:-
the
Principal
enactment. (1) by the substitution in subsection (1), (2), (3), (5),
(6), (7) and (9) of that section for the words “the
Board” wherever it occurs in those subsections, of
the words “the Board or the Tax Appeal
Commission, as the case may be,”, and
(2) by the insertion, immediately after subsection (7)
of that section, of the following new subsection :-
“(7A) Where the Court of Appeal makes an
interim determination under subsection (7), the
Court may make Order that the full tax in dispute
or part thereof, be paid in a manner as the Court
considers reasonable, pending the final
determination of the appeal.
Any excess payment of tax arising as a result of
the final determination by the Court on the appeal
shall be refunded to the appellant.”.
Insertion of 46. The following new section is hereby inserted
new immediately after section 177 of the principal enactment
section 177A in
the and shall have the effect as section 177A of that enactment :-
principal
enactment. "Recovery of 177A. (1) Where a body corporate has not
tax from paid any tax on or before the due date, as
principal
required under section 113, it shall be lawful
officers and
others. for the Commissioner-General to proceed under
all or any of the provisions of this Act against
the manager, secretary, any director or any
other principal officer of such body corporate,
as if such manager, secretary, director of
Inland Revenue (Amendment) Act, No. 22 of 2011 31
principal officer, as the case may be, is
responsible for such default, unless such
manager, secretary, director or principal officer,
as the case may be, proves the contrary to the
satisfaction of the Commissioner – General,
notwithstanding anything in any other written
law relating to such body corporate.
(2) Where an unincorporated body of persons
has not paid any tax on or before the due date,
as required under section 113, it shall be lawful
for the Commissioner – General to proceed
under all or any of the provisions of this Act
against any partner or office – bearer of such
unincorporated body of persons as if he is
responsible for such default, unless such
partner of office bearer, as the case may be,
proves the contrary to the satisfaction of the
Commissioner General, notwithstanding
anything in any other written law.”.
47. Section 200 of the principal enactment as last Amendment of
section 200 of
amended by Act, No. 19 of 2009 is hereby further amended
the
by the addition, immediately after subsection (8) of that principal
section, of the following new subsection :- enactment.
“(9) Any refund arising to any person, as provided
for in this section, shall be credited directly to a bank
account of such person.”.
48. The following new section is inserted immediately Insertion of new
section 204A in
after section 204 of the principal enactment and shall have
the principal
effect as section 204A of that enactment :- enactment.
"Penal 204A. Any auditor or tax practitioner who
provision in the discharge of his professional duty,
relating to
mis- deliberately misinterprets any provision of this
interpretation Act or regulation, rule or order made there
of provisions
of the Act by under shall be guilty of an offence under this
auditors and Act and on conviction after summary trial
tax
practitioners. before a Magistrate, be liable to a fine not
32 Inland Revenue (Amendment) Act, No. 22 of 2011
exceeding rupees fifty thousand or to
imprisonment of either description for a term
not exceeding six months or to both such fine
and imprisonment.”.
Amendment of 49. Section 217 of the principal enactment as last
section 217 of amended by Act, No. 19 of 2009 is hereby further amended
the
as follows :-
principal
enactment.
(1) in the definition of the expression “charitable
purpose”:-
(a) by the substitution in paragraph (b) for the
words “education or knowledge;”, of the
words “education or knowledge other than
by any institution established for business
purposes or by any institution established
under the Companies Act:”;
(b) by the addition immediately after paragraph
(b), of the following paragraph :-
“(bb) activities for the protection of
the environment or eco-friendly
activities”;
(2) by the insertion, immediately after the definition
of the expression “taxable income”, of the following
new definition :-
“Tax Appeals Commission” means the
Tax appeals Commission established by
the Tax Appeals Commission Act, No. 23
of 2011;”.
Amendment of
50. The First Schedule to the principal enactment as
the First
Schedule to the last amended by Act, No. 19 of 2009, is hereby further
principal amended as follows :-
enactment.
(1) by the substitution in Part IA of that Schedule, for
the words “any individual other than an individual
referred to in Part II or Part III”, of the words and

Inland Revenue (Amendment) Act, No. 22 of 2011 33
figures, “but ending on or before March 31, 2011,
any individual other than an individual referred to
in Part II or Part III”,;and
(2) by the insertion immediately after Part IA of that
Schedule, of the following new Part :-
“PART I B
For any year of assessment commencing on or after
April 1, 2011, any individual other than an individual
referred to in Part II or Part III –
On the first Rs. 500,000/- 4 per centum
of the taxable income
On the next Rs. 500,000/- 8 per centum
of the taxable income
On the next Rs. 500,000/- 12 per centum
of the taxable income
On the next Rs. 500,000/- 16 per centum
of the taxable income
On the next Rs. 1,000,000 20 per centum
of the taxable income
On the Balance of the taxable income 24 per centum”
51. The Second Schedule to the principal enactment as Amendment of
last amended by the Act. No. 19 of 2009, is hereby further the Second
Schedule to the
amended as follows :- principal
enactment.
(1) in PART – A of that Schedule by the substitution
for item 1 of that Part, of the following item :-
“1. Any venture capital company –
(a) For any year of assessment
commencing on or after
April 1, 2006, but prior to
April 1, 2011– on the
taxable income 20 per centum;
34 Inland Revenue (Amendment) Act, No. 22 of 2011
(b) For any year of assessment
commencing on or after
April 1, 2011 – on the
taxable income 12 per centum.”
(2) by the substitution for PART – B of that Schedule
of the following new PART :-
“PART – B
1.(a) For the year of assessment commencing on
April 1, 2006 —
Any company other than a
company referred to in PART –
A and of which the taxable
income does not exceed Rs.
5,000,000 15 per centum;
(b) For any year of assessment commencing on or
after April 1,2007, but prior to April 1, 2011 –
Any company —
(A)(i)of which the taxable
income does not exceed
Rs. 5,000,000/-;
(ii)which is not a company
referred to in PART-A;
and
(B) Which is not the
holding company, a
subsidiary company, or
an associate company of
a group of companies on
the taxable income 15 per centum;
(c) For any year of assessment commencing on or
after April 1, 2011 –
Any company —
Inland Revenue (Amendment) Act, No. 22 of 2011 35
(A)(i)of which the taxable
income does not exceed
Rs. 5,000,000/-;
(ii) which is not a company
referred to in PART-A;
and
(B) Which is not the holding
company, a subsidiary
company, or an associate
company of a group of
companies
on the taxable income 12 per centum;
For the purpose of item (B) of paragraph (b)
and paragraph (c), the expressions “holding
company”, “subsidiary company”, and,
“group of companies” shall have the same
respective meanings which they have in
the Companies Act, No. 7 of 2007.
2. Any company for the year of assessment being
any year of assessment commencing prior to
April 1, 2011 in which its shares are first quoted
in any official list published by a stock exchange
licensed by the Securities and Exchange
Commission of Sri Lanka (hereinafter referred
to as the “first year of assessment”) and for each
year of assessment within the period of four years
immediately succeeding that first year of
assessment,
(a) for which the taxable
income exceeds Rs.
5,000,000/-; or
(b) if such company is a
holding company, a
subsidiary company or an
associated company of a
group of companies
on the taxable income for
that year of assessment 33 1/3 per centum;
36 Inland Revenue (Amendment) Act, No. 22 of 2011
Provided that where such first year of
assessment is any year of assessment which
commences prior to April 1, 2006, the rate
of 33 1/3 per centum shall apply in relation
to any year of assessment which falls within
such period of four years, but which
commences on or after April 1, 2006.
3. Any company other than any company
hereinbefore referred to in this Schedule, on the
taxable income-
(a) for any year of
assessment
commencing prior to
April 1, 2011 35 per centum;
(b) for any year of
assessment
commencing after
April 1, 2011 28 per centum;
4. Where the taxable income of any company for
any year of assessment exceeds five million
rupees, then such part of the tax computed in
accordance with this Act, as being payable by
such company for such year of assessment as is
attributable to such excess, shall not be more
than such excess.”.
Amendment of 52. The Third Schedule to the principal enactment as
the Third last amended by the Act No. 9 of 2008, is hereby further
Schedule to the
amended as follows:-
principal
enactment.
(1) by the substitution in item 7 of that schedule, for
the words and figures “on or before March 31, 2008
or commencing on or after April 1, 2013 5 per
centum”, of the words and figures
“on or before March 31, 2008 5 per centum”;
Inland Revenue (Amendment) Act, No. 22 of 2011 37
(2) by the substitution for item 8 of that Schedule, of
the following item:-
“8. Any club or association referred to in section
101, on the taxable income for –
(a) any year of assessment
commencing prior to
April 1, 2011 20 per centum
(b) any year of assessment
commencing prior to
April 1, 2011 10 per centum”;
53. The Fifth Schedule of the principal enactment Amendment of
as amended by the Act No. 9 of 2008, is hereby further the Fifth
amended as follows:- Schedule to the
principal
(1) by the substitution for item 5 of that Schedule, of enactment.
the following item:-
“5. The rate of income tax on profits and income
from off-shore foreign currency transaction
of any foreign currency banking unit, for —
(a) any year of assessment
commencing prior to
April 1,2011 20 per centum;
(b) any year of assessment Appropriate rate
commencing on or under Second
after April 1, 2011 Schedule”;
(Section 41)
(2) by the substitution in item 6 of that Schedule for
the words “profits and income arising to”, of the
words and figures “profits and income arising before
April 1, 2011, to”;
(3) by the substitution in item 8 of that Schedule, for
the words “profits or gains on the disposal”, of the
words and figures “profits or gains on the disposal
on or before March 31, 2007”;
38 Inland Revenue (Amendment) Act, No. 22 of 2011
(4) by the substitution for item 9 of that Schedule, of
the following item:-
“9. The rate of income tax on profits from and
undertaking carried on by a person other than a
company,
(a) engaged in agriculture, As per the
promotion of tourism or First
construction work as Schedule,
subject to a
defined in section 45 or
maximum
section 217, being
of 15
profits for any year of
per centum
assessment commencing
prior to April 1, 2011;
(b) engaged in agriculture, As per the
manufacture of animal First
Schedule,
feed, promotion of
subject to a
tourism, or construction
maximum
work as defined in of 12
section 45 or section percentum.”;
217, being profits for
any year of assessment
commencing on or after
April 1, 2011.
(Section 45)
(5) by the substitution for item 10 of that Schedule, of
the following item:-
“10. The rate of income tax on profits from and
undertaking carried on by a company,
(a) engaged in agriculture,
promotion of tourism or
construction work as
defined in section 46 or
Inland Revenue (Amendment) Act, No. 22 of 2011 39
section 217, being
profits for any year of
assessment commencing
prior to April 1, 2011; 15 per centum;
(b) engaged in agriculture,
manufacture of animal
feed, promotion of
tourism, or construction
work as defined in
section 46 or section
217, being profits for
any year of assessment
commencing on or after
April 1, 2011. 12 per centum”;
(Section 46)
(6) by the substitution for item 11 of that Schedule, of
the following item:-
“11. The rate of income tax applicable to
specialized housing banks, for-
(a) any year of assessment
commencing prior to 20 per centum;
April 1, 2011
(b) any year of assessment Appropriate rate
commencing on or after under Second
Schedule.”;
April 1, 2011
(Section 47)
(7) by the substitution for item 14 of that Schedule, of
the following new item:-
40 Inland Revenue (Amendment) Act, No. 22 of 2011
“14A. The profits and As per the First
income of any Schedule, but
agricultural subject to a
undertaking referrd maximum of 10
to in section 16 of per centum for
the Act, for any year an individual, and
of assessment 10 per centum
commencing prior for a company.”;
to April 1, 2011;
(Section 48A)
(8) by the substitution for item 16 of that Schedule, of
the following item:-
“16. The rate of income tax on qualified export
profits and income of a person not being a
company, who commenced to carry on any
specified undetaking prior to April 1, 2014, for-
(a) any year of As per the First
assessment Schedule, but
commencing prior subject to a
to April 1, 2011 maximum of
15 per centum
(b) any year of As per the First
assessment Schedule, but
commencing on or subject to a
after April 1, 2011 maximum of
12 per centum.”;
(Section 50)
(9) by the substitution for item 17 of that Schedule, of
the following item:-
“17. The rate of income tax on qualified export
profits and income of a company, which
commenced to carry on any specified undetaking
prior to April 1, 2014, for-
(a) any year of
assessment
commencing prior to
April 1, 2011; 15 per centum
Inland Revenue (Amendment) Act, No. 22 of 2011 41
(b) any year of
assessment
commencing on or
after April 1, 2011 12 per centum.”;
(Section 51)
(10) by the substitution for item 18 of that Schedule, of
the following item:-
“18. The rate of income tax on qualified export
profits and income of a company, which
commenced to carry on any specified undetaking
prior to April 1, 2015, for-
(a) any year of assessment
commencing prior to
April 1, 2011 15 per centum
(b) any year of assessment
commencing on or 12 per centum.”;
after April 1, 2011
(Section 52)
(11) by the substitution for item 20 of that Schedule, of
the following item:-
“20. The rate of income tax on profits and income
from deemed exports of any person or partnership,
for-
(a) any year of As per the First
assessment Schedule, but
commencing prior subject to a
to April 1, 2011 maximum of 15
per centum for an
individual, and 15
per centum for a
company.
42 Inland Revenue (Amendment) Act, No. 22 of 2011
(b) any year of As per the First
assessment Schedule, but
commencing on or subject to a
after April 1, 2011 maximum of 12 per
centum
for an individual,
and 12 per centum
for a company.”;
(Section 56)
(12) by the substitution for item 24 of that Schedule, of
the following item:-
“24. The rate of income tax applicable to any
partnership on divisible profits and other income,
other than on any assessment made, for-
(a) any year of
assessment
commencing prior
to April 1, 2011 10 per centum
(b) any year of
assessment
commencing on or
after April 1, 2011 8 per centum.”;
(Section 78)
(13) by the substitution for item 25 of that Schedule, of
the following item:-
“25. The rate of income tax applicable to any
person who is not a citizen of Sri Lanka carrying
on the profession or vocation of an entertainer or
artiste, for-
(a) any year of
assessment
commencing prior
to April 1, 2011 15 per centum
Inland Revenue (Amendment) Act, No. 22 of 2011 43
(b) any year of
assessment
commencing on or
after April 1, 2011
12 per centum.”;
(Section 96)
(14) by the substitution for item 26 of that Schedule, of
the following item:-
“26. The rate of income tax applicable to any
profits and income from petroleum exploration of
any person, or in the case of a partner of a
partnership, as referred to in section 105, for-
(a) any year of
assessment
commencing prior to
April 1, 2011
15 per centum
(b) any year of
assessment
commencing on or
after April 1, 2011
12 per centum.”;
(Section 105)
15. by the substitution for item 27 of that Schedule, of
the following item :-
“27. The rate of income tax applicable to the profits
on the receipt of any fund set up or funds received
by a Non Governmental Organization, for-
(a) any year of
assessment
commencing prior to
April 1, 2011
30 per centum
(b) any year of
assessment
commencing on or
after April 1, 2011
28 per centum.”;
44 Inland Revenue (Amendment) Act, No. 22 of 2011
(Section 102)
16. by the addition, immediately after item 28 of that
Schedule, of the following new items:-
“29. The rate of income tax
applicable to such part of the
taxable income of any person
or partnership, as
consists of profits or income
from the manufacture and sale
or import and sale of any
liquor or tobacco product, for
any year of assessment
commencing on or after April
1, 2011 40 per centum
30. Rate of income tax applicable As per the First
to such part of the profits of Schedule, but
any person engaged in an subject to a
undertaking referred to in maximum of 10
section 59A; per centum for an
individual, and 10
per centum for a
company.
31. The rate of income tax As per the First
applicable to any undertaking Schedule, but
carried on in Sri Lanka for subject to a
operation and maintenance of maximum of 10 per
facilities for storage, centum for an
development of software, or individual, and 10
supply of labour per centum for a
company.
32. The rate of income tax As per the First
applicable to profits and Schedule, but
income from educational subject to a
services. maximum of 10
per centum for an
individual, and 10
per centum for a
company.
Inland Revenue (Amendment) Act, No. 22 of 2011 45
33. Rate of income tax applicable
to any undertaking with an
annual turnover not
exceeding rupees three
hundred million other than
buying and selling activities. 10 per centum.”.
54. The following new section is hereby inserted Insertion of new
immediately after section 208 of the principal enactment section 208A in
the principal
and shall have effect as section 208A of that enactment:-
enactment.
“Committee 208A. The Commissioner-General shall
to interpret appoint a Committee comprising senior officers
provisions of
of the Department of Inland Revenue who
Act and issue
rulings. shall be mandated to interpret the provisions
of all Acts administered by him,
notwithstanding anything to the contrary in
any such Act. Such Committee shall in terms
of such mandate issue all necessary guidelines
and instructions as are required in order to
ensure uniformity with regard to such
interpretation.”.
55. Any person or partnership carrying on an enterprise, Exemption of
having an annual turnover of a sum not exceeding rupees income tax
payable by
one hundred million who is liable to pay income tax under
certain small and
the Inland Revenue Act, No. 10 of 2006, who has defaulted medium
in the payment of such tax as is payable by him under such enterprises.
Act in respect of any year of assessment ending on or before
March 31, 2010, due to the existence generally of any
conflict environment or due to any financial constraints of
such persons or partnership, shall be exempted from the
payment of such tax as is in default under such 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 tax in default:
Provided further, the person or parternship to whom the
Certificate of Exemption is issued, shall simultaneously
46 Inland Revenue (Amendment) Act, No. 22 of 2011
forward to the Commissioner-General of Inland Revenue a
written assurance to the effect that such person or partnership
will be responsible for the payment of all sums which may
become payable by him under scuh Act, in respect of any
year of assessment commencing on or after April 1, 2010.
Retrospective 56. The amendments made to the principal enactment
effect. by the provisions of this Act, shall be deemed for all purposes
to have come into force on April 1, 2011:
Provided that:-
(a) the amendments made to section 7 of the
principal enactment by subsection (2) of
section 3 of this Act, shall be deemed for all
purposes to have come into force on April 1,
2008;
(b) the amendments made to sections 20, 21 and
21A of the principal enactment by section 10,
section 11 and section 12 respectively of this
Act, shall be deemed for all purposes to have
come into force on April 1, 2009.
Sinhala text to 57. In the event of any inconsistency between the
prevail in case Sinhala and Tamil texts of this Act, the Sinhala text shall
of an
prevail.
inconsistency

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