D P R Consultants launches website for investors

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D P R Consultants (Pvt) Limited launched www.srilankainvestment.com website on October 4, 2016 in Colombo.

 

The website caters to the key topic of investments. Investments to Sri Lanka could be foreign or local. However the government is more focused on foreign investments.

 

The Chairman and Managing Director of D P R Consultants (Pvt.) Ltd., Bharatha Subasinghe speaking to Daily News Business said that their objective is to facilitate investors to get advice and approvals from government institutes such as BOI, Company Registrations, Inland Revenue, Customs and many other institutions.

 

“When foreign investors come to Sri Lanka, they don’t know to find a suitable location to start their business and to find lands.They find it difficult to get information about the investment procedures in this country and to get the approvals from government institutes. Our target is to provide all services to foreign investors to start their businesses in Sri Lanka,” he said.

 

“We provide consultancy services to foreign investors and locals free of charge and we do have experienced charted accountants, lawyers in our team. We can help them to open a bank account here and to help them to finalize other registrations here too.We provide visa facilitation also for investors,” he said.

 

“The Sri Lankan government is promoting foreign investment at the moment and we have to setup a very good system in Sri Lanka to promote and to attract foreign investors to come here to invest.We hope that by next year there will be a positive response from more foreign investors,” he said.

 

D P R Consultants assist investors to save time, provide cost effective services to investors by being a “One Stop Shop” or “Once Place for Business Facilitation in Sri Lanka” by making available services in respect of obtaining government approvals, company incorporation and registration of foreign branch office, tax advisory services, accounting and auditing services, legal and labour law consultation.

 

The benefit of the website is that investors can request all the services online and investors can get aware of the type of services, information and documents required for investment in Sri Lanka by login into the website.

 

DPR also organizes corporate training programmes, land and building for investors and arranging necessary business meetings to investors.

 

Daily News

2016.10.06

http://dailynews.lk/2016/10/06/business/95092

D. P. R. Consultants unveils srilankainvesment.com

In a move to bolster investments in the country, private sector firm D.P.R. Consultants on Tuesday unveiled www.srilankainvestment.com in Colombo to facilitate and provide information about services required by investors.

 

The firm expects to provide a cost effective service to investors by being ‘one place for business facilitation in Sri Lanka’. D. P. R. Consultants is an investment facilitator and a service provider to local as well as foreign investors.

 

The benefit of the website is that investors can request services in obtaining Government approvals, company incorporation and registration of foreign branch offices, tax advisory services, accounting and auditing services; and legal and labour law consultations online. The site will also offer investors an idea about the documents and information required for investments in Sri Lanka.

 

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(From left) P. T. A. Lanka Managing Partner Saman Sirilal, Chief Guest Senior Tax and Investment Advisor P. Guruge and D.P.R Consultants Chairman and Managing Director Bharatha Subasinghe launching the website

 

Subasinghe pointed out that the existing system for getting an investment project approved in Sri Lanka is highly complex and time consuming, with archaic policies and multiple approvals from various Government authorities, which eventually exhaust the investor.

 

“It is the responsibility of the policymakers to develop appropriate policies to drive investments in the country and if policies are not in place there will be no investments,” he stressed.

 

In the 2016 Budget, the Government brought forward investment friendly proposals such as the new Investment Act, Land Bank and other crucial amendments in investor-related Acts, which are yet to be implemented.

 

Subasinghe emphasised that it was the responsibility of professionals in the private sector to advise prospective investors with sound legal advice regarding investment procedures in Sri Lanka.

 

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“There is no doubt that everybody should follow the rule of law, but these procedures should be straightforward in order to attract investments,” he said.

 

Chief Guest of the event Senior Tax and Investment Advisor P. Guruge said that changing laws frequently does not help in attracting investments and that policy consistency is a key issue that needs to be addressed by the Government.

 

“I hope the relevant authorities will understand the purpose of this website and extend their assistance to strengthen investment in Sri Lanka,” he said.

 

D. P. R. Consultants Ltd also conduct corporate training, visa facilities for foreign investors and employees, land and building for investors and arranging business meetings with potential investors.

 

Daily FT

2016.10.06

http://www.ft.lk/article/571891/D.-P.-R.-Consultants-unveils-srilankainvesment.com

DPR consultants launch ‘one stop’ website for foreign and local investors

Ms. Marie Cassagne, MD, Prama (Pvt) Ltd., Bentota, Saman Sirilal, managing partner of R T A Lanka (Chartered Accountants), P. Guruge, senior tax and investment advisor and D P R Consultants. Bharatha Subasinghe- chairman and managing director of D P R Consultants (Pvt.) Ltd. at the launch event. Photographer Jude denzil Pathiraja

 

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The Island

2016.10.09

http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=153445

Corporate Training Programs by D. P. R. Training Institute

Training and career development are very vital in any company or organization that aims at progressing. Training simply refers to the process of acquiring the essential skills required for a certain job. It targets specific goals, for instance understanding a process and operating a certain system. Career development, on the other side, puts emphasis on broader skills, which are applicable in a wide range of situations. This includes decision making, thinking creatively and managing people.

 

In today’s economy, it’s natural for employers to be more focused on cutting back than on adding to the budget. But there are certain areas of the business that are always going to require investment. Perhaps the primary place that employers should always be striving to improve is human capital. Businesses cannot afford to lose their best employees to competitors that offer better opportunities for career advancement, and keeping employees sharp will only improve a business’s competitive position.

 

D P R emphasis that training for employees and knowledge for business owners or directors of any company is equally important to achieve business goals. Every investor, company directors and executive staff of any organization should be knowledgeable of the provisions of Companies Act, Labour Laws, Accounting Practices, Tax laws or other laws from the first day of the business till end of that business in Sri Lanka. A well-organized training and development program gives constant knowledge and experience. Consistency is very vital when it comes to organizations or company’s procedures and policies.

 

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Bharatha Subasinghe, CEO D. P. R. Training Institute and Famous Lecturer for Accounting and Taxation Deliver the Special Lecture topic of “Pay as you Earn” for participants of HR management and Accountancy officers in Private Sector held at City Hotel, Colombo Fort Recently.(Picture By Jude Denzil Pathiraja)

 

Training and career development are very vital in any company or organization that aims at progressing. Training simply refers to the process of acquiring the essential skills required for a certain job. It targets specific goals, for instance understanding a process and operating a certain system. Career development, on the other side, puts emphasis on broader skills, which are applicable in a wide range of situations. This includes decision making, thinking creatively and managing people.

 

In today’s economy, it’s natural for employers to be more focused on cutting back than on adding to the budget. But there are certain areas of the business that are always going to require investment. Perhaps the primary place that employers should always be striving to improve is human capital. Businesses cannot afford to lose their best employees to competitors that offer better opportunities for career advancement, and keeping employees sharp will only improve a business’s competitive position.

 

D P R emphasis that training for employees and knowledge for business owners or directors of any company is equally important to achieve business goals. Every investor, company directors and executive staff of any organization should be knowledgeable of the provisions of Companies Act, Labour Laws, Accounting Practices, Tax laws or other laws from the first day of the business till end of that business in Sri Lanka. A well-organized training and development program gives constant knowledge and experience. Consistency is very vital when it comes to organizations or company’s procedures and policies.

 

In most of companies in Sri Lanka directors, owners or executive officers are not or less knowledgeable the procedure & practices about incorporation of a company, type of Forms used, requirements and responsibilities of directors under the Companies Act No 07 of 2007, liquidation or strike of name of company, labour laws at the time of recruiting staff till termination or resignation of any employees in different sectors, type of taxes, tax rates, type of tax Returns & filling of such tax returns, tax exemptions, tax administration procedures penal provisions of tax statutes, requirements of preparation of financial statements under Sri Lanka Financial Reporting Standards or under Inland Revenue act etc which cause difficulties for strategic and operational decisions.

 

To overcome above D P R Training Institute organize workshops for corporate sector in Sri Lanka with respect of Company Law & Procedures, Labour Laws, Taxes such as Value Added Tax, Nation Building Tax, Economic Service Charge, Income Tax, PAYE Tax, Stamp Duty, Tax administration etc and training programs for preparation of financial statements. We understand that providing knowledge is not sufficient to any employee or employer but practice to get knowledge is most important. Therefore, all our programs are planned to provide practical knowledge while providing subject knowledge to all participants and this type of training programs are well successful and appreciated by participants.

 

The Island

2015.03.07

http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=120913

 

Practical training in accounting and taxation key issue in Sri Lanka

Practical training in Accounting and Taxation is most important area to be considered in current context of business even though there are numbers of local and International Institutions in Sri Lanka to get qualifications in accounting and related subjects, said by P. Guruge, chief guest and retired deputy commissioner of Inland revenue and formal fiscal advisor to the Ministry of Finance at the certificate award ceremony held on recently at Central Bank, Rajagiriya.

 

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Ms. Gothami Abeythilake (Admin Officer), Bharatha Subasinghe (C.E.O.), P. Guruge (Chief Guest) and Ruwan Thilakasiri ( Course Coordinator) with the participants.

 

D P R Training Institute, an Institute providing practical training in accounting organized the event to award certificate for students who completed their practical training at DPR Training Institute at Rodney Street, Cotta Road, Colombo 8.

 

The objective of the Institute is to provide practical training in Accounting and Taxation for those who have no practical experience, especially students looking to gain a foothold into the job market in accounting and those who are currently employed but have limited practical experience in accounting and taxation.

 

Further, this course is helpful to entrepreneurs as well. Institute is keen in providing practical experience in accountancy, bookkeeping, labour laws, cash and banking procedures, inventory, taxation, auditing, company incorporation, import and export procedures and budgeting.

 

Guruge further said that adding a another certificate to their certificates bag is not much important but gaining practical knowledge with theoretical knowledge is the key factor to be considered and further said that DPR Training Institute has initiated to provide practical training in proper manner within short period of time at very reasonable rate and qualifications are not a barrier to study the course and course is suitable for business owners as well.

 

Bharatha Subasinghe, chief executive officer and lecturer said that it is a very difficult task in finding practical experience employees in finance sector due to lack of practical training opportunities in Sri Lanka and most of accounts executive may involve in one activity of accounts departments but they have no idea about other activities of accounts department.

 

Therefore, DPR has initiated to conduct practical training courses. Subasinghe further said that to fill the gap of less opportunity in practical training in Sri Lanka DPR Training Institute will strength their capacity to train more staff in the field of accounting since it will benefit to both employee and employer.

 

Amila Alawathugoda, Managing Director of advertising company and Mrs. Rajika Pathirana account’s executive of a tour company addressed the ceremony on behalf of all the students and said that the training they gathered during the course is very much helpful them.

 

Certificates were awarded to all students by P. Guruge and course coordinator and lecturer Ruwan Thilakasiri and Ms. Gothami Abeythilake too participated for the event.

 

Daily News

2012.07.10

http://archives.dailynews.lk/2012/07/10/bus22.asp

Value of supply of healthcare services

SEC. (I) – GAZETTE EXTRAORDINARY OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA – 05.10.2016 1A
2016’11’01 No. 1991/17 – TUESDAY, NOVEMBER 01, 2016 EXTRAORDINARY The Gazette of the Democratic Socialist Republic of Sri Lanka
(Published by Authority) PART I : SECTION (I) — GENERAL Government Notifications VALUE ADDED TAX ACT, No. 14 OF 2002

BY virtue of the powers vested in me under Subsection (15) of Section 5 of the Value Added Tax Act, No. 14 of 2002, as last amended by the Value Added Tax (Amendment) Act, No. 20 of 2016, I, Ravi Karunanayake, Minister of Finance do by this order prescribe that the cost of the services set out in the Schedule hereto, shall be excluded in calculating the value of supply of healthcare services for the purpose of Value Added Tax, with effect from 01.11.2016.
RAVI KARUNANAYAKE, Minister of Finance.
Ministry of Finance, Colombo 01, 1st of November 2016.

Schedule

Cost of any healthcare service other than the fees paid to medical practioners, medical consultation fees, channeling fees and hospital room charges.

Income Tax (IT)

1 Income Tax (Amendments to the Inland Revenue Act No.10 of 2006)

1.1 Tax Concessions

1.1.1 Agriculture

1.1.1.1 Development of seeds and planting martials by a company :

A reduction of 50% of the tax payable on the profits from the locally developed seeds and planting materials for a period of 5 years.

[ Section 16B will be amended]

 

1.1.1.2 Drip irrigation, greenhouse technology and high yielding seeds:

A reduction of 50% of the tax payable on the profits from agriculture by a company using drip irrigation method, greenhouse technology and high yielding seeds fora period of 5 years.  For this purpose greenhouse technology, drip irrigation and high yielding seeds will be defined.

[Relevant provisions of the Inland Revenue Act will be amended]

 

1.1.1.3 Fruit and Vegetable Industry :

The cost of acquisition of any machinery used for canning fruits and vegetables will be treated as a qualifying payment in addition to the depreciation allowance claimable on such machinery.

[Sections 25 and 34 will be amended]

 

1.1.2 Development of Micro and SME Sector

 

1.1.2.1 Tax payable by Private Equity Funds or Venture Capital companieson the profits earned by providing funds to upgrade SMEs registered with the SME Board of CSE up to the trading level, will be reduced by 50% for a period of 5 years.

 

1.1.2.2 SMEs, creating incubators for SMEs (not by splitting or reconstruction of an existing SME) by investing in designated areas will be entitled to 50% reduction of the tax payable on profits of such activity for a period of 3 years.  For this purpose ‘SME’ and the ‘identification of activities of Venture capital companies and Equity Funds’ will be specified.

 

1.1.3 Incentive for Thrust Industries: A reduction of 50% of the tax payable on the profits from the locally manufacturing of red clay tiles for a period of 3 years.

 

1.1.4 Concessions to other sectors

1.1.4.1 A reduction of 50% of the tax payable for a period of 5 years on the profit from the following activities carried out by any person:

(i) being an academic entity which offer internationally accredited courses or training programmes aimed at geriatric care or child care;

(ii) engage in building housing facilities for the elderly persons;

(iii) construction and sale of housing units in collaboration with the Government, to officers of the government sector.

 

1.1.4.2 A reduction of 50% of the tax payable for a period of 5 years from the commencement of the commercial operations by any company specifically incorporated for MICE (Meeting, Incentives, Conferences and Exhibitions) on the profits from such activities.

 

1.1.4.3 The profits generated by a company which is attributable to the expansion carried out by modernization of existing factories which is considered based on the employment generation within a period of one year commencing from April 1,2016, will be subject to half tax rate of the applicable rate for 3 years. For this purpose the necessary criteria will be specified.

 

1.1.4.4 To encourage persons to be part of the country’s higher education revolution through endowments given to our National Universities to engage in research, the triple tax deductions available for R&D activities be extended to accommodate endowments given to our National Universities.

 

1.1.4.5 Construction Industry: The cost of acquisition of machinery necessary for purifying sea sand will be treated as a qualifying payment in addition to the depreciation allowance claimable on such machinery.

 

1.2 Investment promotion

1.2.1 New Foreign Exchange Management Act ( FEME) :

A new Act named ‘Foreign Exchange Management Act’ will be introduced to facilitate foreign investments. The Inland Revenue Act will also be amended to accommodate such investments (where necessary) and to exempt income tax on foreign currency inflows.

 

1.2.2 Income from dividends on investment made by non- citizens or foreign companies in listed shares through inward remittance will be exempted from income tax.

 

1.2.3 Concession on investment in lagging region :

In lieu of the present concessions introduced in 2015, the following new concession will be introduced:

50% reduction of the tax payable by a new company (not by splitting or reconstruction of an existing company) set up in any lagging region with a minimum investment of US$ 10 Mn or 500 new employment (with new EPF Nos) for manufacturing (other than liquor or tobacco) or provision of services, for a period of 5 years form the commencement of commercial operation.

The period will be expanded to 8 years, if the new employment exceeds 800 and to 10 years if the investments for theme park.

[The concessions under section 59I, 59J and 59K will be removed which are redundant due to rate revision].

 

1.2.4 The 50% rate reduction available under the IR Act, for listing in CSE will be extended by expanding the present deadline of April 1, 2017 for further :

(i) 2 years for listing in CSE ; or

(ii) 3 years for listing in any foreign Stock Exchanges [Section 59D will be amended]

 

1.2.5 The profits and income from the cultivation of tea or rubber by any plantation company, of which the Government shareholding is in existence, will be exempted for a period of 2 years commencing from April 1, 2016.

 

1.2.6 Tax holidays and exemptions

(i) The Strategic Development Act will continue to be effective for existing companies that have availed the concessions under that Act.

For new investments, instead of Strategic Development Act, the “New investment” Act will be enacted.

 

(ii) The granting of tax concessions for any investment should be strictly under the supervision and monitoring of the Ministry of Finance which would be governed by regulations issued by the Minister. BOI or IRD will not grant any new tax holidays other than facilitation and implementation of the concessions.

1.3 Other Changes / amendments:

1.3.1 Management fee will be defined for insurance industry ;

1.3.2 The triple deduction for Research and Development expenses will be allowed only if a technology advancement and yield development is proved.

[Sections 25 and 92 will be amended]

 

1.3.3 The exemption on the interest income on foreign loans will be restricted on the interest on loans taken from foreign banks or financial institutions.

[ Section 9 will be amended]

 

1.3.4 Certain exemption on dividends after the completion of the tax holiday period will be removed.

[ Section 10 will be amended]

 

1.3.5 The refund claim for any year of assessment commencing on or after April1, 2016, should be finalized within three years from the claim of such refund (with the Return). If not finalized, the refund would be allowed to be set off against future tax liability of the same.

[Relevant provisions of the Act will be amended]

 

1.3.6 The penal provisions will be:

– amended to strengthen the tax collection and compliance by tax payers and tax practitioners; and

– introduced to ensure proper implementation of ‘transfer pricing”.

 

1.3.7 Relevant amendments will be incorporated (where necessary) for the implementation of RAMIS.

 

1.3.8 The expansion of the term “Approved Accountant” for the purposes of section 107 by adding AAT member, will be revisited by restricting the area of audits to the turnover limit not exceeding Rs 100 million and making provision to grant approval by the Commissioner General of Inland Revenue having satisfied that the respective individual has acquired necessary competencies to perform the required work under the Inland Revenue Act, in conformity with an appropriate regulatory mechanism in place.

[ Section 107 will be amended]

 

1.3.9 Administration of the transfer pricing on domestic transactions will be simplified and the areas will be specified limiting the scope considering the associated cost involved.

[ Section 104 and 104A will be amended and relevant Gazette will be published ]

 

1.3.10 Individual Taxpayers who pay Rs 25 million or more will be granted special privileges and such privileges will be regularized through a Gazette Notification by incorporating the relevant provisions to the Act.

 

1.3.11 The qualifying payment relief introduced on the expenditure associated with cost of acquisition or merger of banks or financial companies under the Banking and Financial institutions consolidation process will be removed considering the deduction already available as a cost.

[section 34 will be amended retrospectively]

 

1.4 Simplification of Income Taxation

The following measures will be taken to simplify the Income Tax Structure

(i) Rate structure will be limited only to two tax rates as the standard rate of 15% with the higher rate of 30%.

 

(a) The higher rate (30%) is applicable for the profits and income of :

– Betting &Gaming

– Liquor

– Tobacco

– Banking and Finance including insurance, leasing and related activities etc.

– Trading activities other than manufacturing or providing of services

 

All the other sectors will be liable to the standard rate of 15% ;

 

(b) The progressive tax rates applicable to individuals will be removed by increasing the tax free allowance toRs 2.4 million per year [( Rs 2,00,000/- per month) and any balance will be liable at the standard rate of 15%. (flat rate);

 

(c) The above tax treatment will be applicable to both employees subject to PAYEand self-employees.

 

(d) Deductions from the total statutory income and the assessable income will be removed considering the tax free allowance entitled to be deducted by individuals, charitable institutions etc. except the losses incurred from trade, business, profession or vocation( deductible subject to the limitations);

 

(e) The exemption on profit from employment referred to in section 8 of the Act will be removed other than the following:

– Retiring benefits and pension paid out of the consolidated fund to Government employees ;

– Earnings in foreign currency on employment out of the country , if such earnings are remitted to Sri Lanka;

– Exemptions for diplomatic missions and diplomatic personnel ;

– Release of the provident fund balance at the time of retirement;

– Compensation for loss of office subject to conditions

 

All the other cash and non-cash benefits (treated as benefit from employment) are liable to tax, if exceed the tax free threshold.

(f) The employees who are employed under more than one employer will be liable to tax at the rate of 15%.

 

(g) Tax on partnership will also be adjusted accordingly.

 

(h) The present Withholding Tax deductible by Bank or Financial institutions on interest from deposits at the rate of 2.5% will be removed and such income will be considered as part of the total statutory income.

(i) The exemption of income from interest on money deposited in banks or financial institutions by senior citizens (over 60 years of age) will remain unchanged.

 

(j) Deduction of Withholding tax on interest income arising to individual out of Sri Lanka under section 95 of the Act, will be at 15% subject to the rate specified under any Double Taxation Avoidance agreement entered into with the Government of Sri Lanka.

[ Relevant provisions and the Rate Schedules will be amended]

 

(ii) Tax exemptions granted to certain organizations under section 7 or miscellaneous exemptions under section13 will be removed.

(a) Removal of Institutional exemptions:

– The exemption on the profits and income of the International Institutions will be restricted to any profits and income other than profit and income from sources generated by charging any fee or contribution from the public in any other manner;

– The present exemption applicable to local institutions will be removed other than any Government Department, Foreign Government, University, Co-operative Society, Central Bank including Monetary Board, charitable institution (subject to conditions) or Government assisted school;

[ Section 7 will be amended]

 

(b) Removal of Miscellaneous exemptions:

The following exemptions will be removed:

-the profits and income arising or accruing to any person from any undertaking for the construction of any Port in Sri Lanka.

– the profits and income arising or accruing to any person from the administration of any sports ground, stadium or sports complex.

– the profits and income arising or accruing to any company, partnership or body of persons in a country outside Sri

Lanka, from any payment made for the use of any computer software, by Sri Lankan Air Lines Ltd or Mihin Lanka (Pvt) Ltd, as a special requirement of such Airlines, if a Double Taxation Avoidance Agreement providing relief for double taxation of such profits and income is not in force between Sri Lanka and that country or tax is not payable in such country on such profits and income.

– 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.

– the profits and income arising or accruing to any person from any undertaking for the operation of any port terminal in Sri Lanka;

[ Section 13 will be amended]

Other Proposals

Inland Revenue Department

Given the current status of the tax administration in the country, the tax administration reforms are required in modernization of systems and procedures to simplify the system in line with tax policy reforms. In this context, the first phase of the Revenue Administration Management Information System (RAMIS), to enable the automated services for filing of returns, payment of taxes, etc., will be effective from 1 January 2016.

Mandatory inclusion of the Taxpayer Identification Number (TIN) or the Business Registration Number (BRN) in all transactions in capturing all business transactions, leading to increased tax collection.

The recommendations of the Taxation Commission will be reviewed and simplification of procedures, application of lower tax rates targeting broader tax base will be at utmost importance.

Steps will be initiated to ensure the revenue collection at Divisional Secretariat level.

The income tax return will be simplified into a one-page document, which would be more tax-payer friendly and would lead to higher compliance.

Existing tax laws in the country are cumbersome, complex and based on traditional British concepts. The complexity of the tax laws has been identified as an impediment for the effective implementation of tax policy in Sri Lanka. It has led to various complications thereby hampering the effective implementation of the tax policy. Therefore, we need to redraft the tax laws to bring about necessary improvements to the legal framework to ensure clarity, consistency and simplicity towards reflecting the features of modern tax systems which will help taxpayers to understand the system easily and eliminate loopholes that have been created by the ambiguities in laws while strengthening tax administration

Steps will be taken to ensure the independency of the tax appeals commission and the appellate procedure, adhering to the principles of natural justice.

Value Added Tax (VAT)

Value Added Tax (VAT) [ Amendments to VAT Act No 14 of 2002]

 

(i)The present single rate will be revised to 3 bands.

0%, standard rate of 8% and higher rate of 12.5%.

– 0% for export of goods and provision of services for payment in foreign currency outside Sri Lanka

– Services sector – 12.5%

– Manufacturing or import of goods – 8% ( with the limitation of input tax )

 

(ii) The present exemptions on the Import or supply of telecom equipment or machinery, high-tech equipment including copper cables for telecom industry will be removed.

 

(iii) The wholesale and retail trade (other than by a manufacturer or importer) will be excluded from VAT

 

(iv) The present threshold will be revised to Rs 3 million per quarter or Rs 12 million per year.

Nation Building Tax

Nation Building Tax (NBT) [Amendments to NBT Act No.9 of 2009]

 

(i) The present rate of NBT will be revised to 4%.

(ii) The present exemptions on the following articles or services will be removed:

– Telecommunication service

– Supply of electricity

– Lubricants

 

(iii) The present threshold will be revised to Rs 3 million per quarter and the threshold of Rs 25 million per quarter will be removed except for any locally procured agricultural produce in the preparation for sale.

Share Transaction Levy

Share Transaction Levy (STL) [ Amendment to PART II of the Finance Act No 5 of 2005]

 

Share Transaction Levy will be removed with effect from January 1, 2016.

Betting and Gaming Levy

Betting and Gaming Levy (Amendments to Betting and Gaming Levy Act No.40 of 1988)

 

(i) The present entry fee of US$ 100 per person who enters Casino entertainment will be removed.

 

(ii) The present annual levy of Rs 200 million for carrying on the business of playing rudjino will be reduced to Rs. 5 million per year.

 

(iii) The present annual levy of Rs 200 million for carrying on the business of Casino will be increased to Rs. 400 million per year.

 

(iv) Directors and shareholders will be personally liable for non-payment or any act which is done to avoid payment of Casino Industry Levy (one off levy)

Economic Service Charge ( ESC)

Economic Service Charge ( ESC) [Amendments to ESC Act No 13 of 2006]

 

(i) The present exclusion of profit making businesses will be removed.

 

(ii) The present maximum liability of Rs 120 million per year will be removed.

 

(iii) The rate is increased from 0.25% to 0.5%.

 

(iv) The period for carried forward of ESC to be set off against income tax payable for any period commencing from April 1, 2016, is reduced from 5 years to 3 years.

 

[ Relevant provisions of the ESC Act will amended]

Excise Duty

The liquor manufacturing License fee and duty rates will be revised.

 

Excise (Special Provisions) Duty:

The concessions and rates will be revised.

 

New Excise Duty    – Web Link  – http://www.customs.gov.lk/tariff/bud2016xid.pdf

 

Excise Duty Exemptions

Government Notifications

EXCISE (SPECIAL PROVISIONS) ACT, NO. 13 OF 1989 Order under Section 3C

BY virtue of the powers vested in me by Section 3C of the Excise (Special Provisions) Act, No. 13 of the 1989, as last amended by Act, No. 17 of 2011, I, Ravi Karunanayake, Minister of Finance, do by this Order declare that, the excisable articles specified in the Schedule hereto are exempt from the payment of Excise (Special Provisions) Duty with effect from 21.11.2015. Order made under Section 3C of the said Act and published in the Extraordinary Gazette Notification No. 1885/43 of 24.10.2014 is hereby rescinded. RAVI KARUNANAYAKE, Minister of Finance. Ministry of Finance, Colombo 01. 20th November, 2015. SCHEDULE

(1) A Motor Vehicle/Article imported under various agreements and MOU’s entered into by the Government of Sri Lanka with overseas organizations and foreign governments.

(2) Locally assembled/manufactured articles, classified under the H. S. Code 84 and 85, with not less than 30% domestic value addition recommended by the Minister-in charge of the subject of industries.

(3) Every article entitled to duty free clearance under Passenger Baggage (Exemption) Regulations made under Section 107 of the Customs Ordinance (Chapter 235).

(4) Every article cleared ex-bond for the use as ship stores or for re-export.

(5) Every article manufactured in Sri Lanka and supplied to any exporter in Sri Lanka where sufficient proof is furnished to the satisfaction of the Director General of Excise that such manufactured article was exported.

(6) Every excisable article, other than motor vehicles principally designed for transport of persons, used for any specified project identified by the Minister – in- charge of subject of Finance and where the taxes are born by the Government as mentioned in the Section f(ii) of the part II of the First Schedule of the Value Added Tax Act No. 14 of 2002.

THE EXCISE ORDINANCE

Excise Notification No. 978

EXCISE DUTY ON MOLASSES, PALMYRAH, COCONUT AND PROCESSED ARRACK

BY virtue of the powers vested in me by Sub-section (1) of Section 22 of the Excise Ordinance (Chapter 52), as amended from time to time, I, Ravi Karunanayake, Minister of Finance do by this Order direct that, with effect from 21st November 2015 – (1) There shall be levied on Molasses, Palmyrah, Coconut and Processed Arrack manufactured in and issued from any licensed manufactory established in Sri Lanka, a duty at the rate of Rupees One Thousand and Eight Hundred Fifty (Rs. 1,850.00) per proof litre on Molasses, Palmyrah, Coconut and Processed Arrackprovided that such duty shall not be levied or recovered on any quantity of the aforesaid liquor which is exported out of the Island; and (2) The Excise Notification, No. 975 published in Gazette Extraordinary, No. 1934/41 of 02.10.2015 is hereby rescinded. Ministry of Finance, Colombo 01. 20th November, 2015. RAVI KARUNANAYAKE, Minister of Finance.

 

Customs Duty

(i) The present 4 band tariff structure of exempt, 7.5%, 15% and 25% will be changed

as exempt, 15% and 30%.

 

(ii) Custom Duty will be revised on following items:

– Beedi leaves, Beedi, Garments, Foot-wear, Beer, Wine, Whisky, and Ethanol

– Agriculture machinery and equipment, dairy industry machinery and equipment and fishing nets

– Sports equipment and Musical instruments

– yachts , caravan carriages, surfing equipment and mini cruise boats identified under specified HS Code No

 

(iii) Certain items in the negative list ( tiles, ceramic and sanitary ware) will be removed

 

(iv) Sri Lanka will complete its commitments on Tariff Liberalization (Phase I) of the South Asian Free Trade Area effective from November 21, 2015.

 

(v) Sri Lanka will fulfill its December 2015 target of commitments on the Tariff Liberalization (Phase II) of the South Asian Free Trade Area effective from November 21, 2015.

 

[ Relevant Gazette will be issued specifying the rate change with effect from November 20, 2016]

 

Web Link

http://www.customs.gov.lk/tariff/bud2016cid.pdf

Ports and Airports Development Levy (PAL)

Ports and Airports Development Levy (PAL)  [Amendments to PAL Act No 18 of 2011]

 

PAL will be increased from 5% to 7.5%

 

To encourage spending by tourists rate will be reduced from 5% to 2.5% on certain electronic and electrical items

 

The present rate of 5% on certain machinery will be removed.

 

[ Relevant Gazette will be issued specifying the rate change]

Special Commodity Levy

In order to promote local industry SCL will be increased on import of fish and fish related products.

Rate will be revised on certain commodities

[ Relevant Gazette will be issued specifying the rate changes]

 

Web Link

http://www.customs.gov.lk/tariff/bud2016scl.pdf

Land Tax

Land (Restriction on Alienation) Act

 

Restriction on transfer will be removed for certain identified investments

 

Tax on leasing of lands will be removed

 

[the relevant provisions of the Land (Restriction on Alienation) Act No 38 of 2014 will be amended]

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Cess

Removal of Cess:

To encourage export of value added products ‘export Cess’ will be remove on pepper, cloves and nutmeg.

 

Impose of Cess:

To encourage local industry Cess at the rate of 10% will be imposed on import of jewellary.

 

Stamp Duty

Stamp Duty [Stamp Duty (Special Provisions) Act No 12 of 2007]

Present Stamp Duty of 1.5% (every Rs. 1000 or part thereof Rs 15/-) levied on Credit Card usage will be removed with regards to local usage of credit cards.

 

Usage of credit card for foreign purchases will be increased to 2.5% ( on every Rs 1000 or part thereof Rs25/-)

 

“Share Certificate” will be exempted from with effect from January 1, 2016.

 

[ Relevant rate change will be Gazetted and applicable on transactions entered into on or after January 1, 2016]

 

Mansion Tax

Mansion Tax [ PART VIII of the Finance Act No 10 of 2015]

The mansion tax applicable on condominium units will be removed; and

 

The first installment of the Mansion tax is payable on or before March 31, 2016.

 

[PART VIII of the Finance Act No 10 of 2015 will be amended ]

Telecommunication Levies

International Telecommunication Operators Levy (ITOL) on incoming calls will be increased US$ Cents 9 to US$ Cents 12.

 

Environmental Fee will be charged per tower at the rate of Rs.50, 000/- per annum.

 

Cess levied at 2% for international transit traffic will be exempted with effect from January 1, 2016.

Import Tax on Garments & Footware

The present composite tax imposed on (at the Custom point) sale of garments to the local market by export oriented companies [refers to in section 22(1) of the VAT Act] will be increased to Rs. 200 /- per piece.

The same rate will be extended to sale of footwear to the local market by export oriented companies.

The applicable rate for sale of fabric and cut pieces remains the same.

The sale of export quality products to the local market by export oriented BOI companies will be restricted to 5% of the total turnover and will be subjected to the tax at the rate specified above.

 

Surtax

Surtax will be imposed with effect from any Year of Assessment commencing from April 1, 2016, at the rate of 25% of the income tax liability of profit on business of Tobacco, Liqour and Betting and Gaming which were earlier subject to income tax at 40%.

Motor Vehicles Charges & Fine

Fine on Road Accidents

A fine of Rs 10,000/- will be imposed on person who is responsible on road accidents payable in case of road accidents. In addition the cost to the government property damage (if any) is also payable.

 

Vehicle Valuation Certificate Fee:

A fee on valuation certificates obtainable for finance facilities will be charged:

– Three wheeler/Motor Cycle – Rs.5,000/-

– All other vehicles – Rs.25,000/-

Effective date :  January 1, 2016.

 

Unregistered vehicles to be registered before 31/03/2016:

Such vehicles could be registered by paying the following fee to RMV:

– Cars/ Vans – Rs.01 Mn

– Other vehicles – Rs.0.75 Mn

 

Vehicle Entitlement fee:

A fee will be imposed in lieu of ‘Motor Vehicle Importers Registration fee’ with effect from January 1, 2016, payable to the Commissioner General of Inland Revenue before the opening of LCs at the

following rates:

Type Rate per vehicle

Motor Cycle/three wheelers- Rs.2,000/-

Motor Cars – Rs.15,000/-

 

Auctioning of Number Plate –

Unique lifetime Number will be subjected to an Onetime fee of Rs.2.50Mn

 

Emission Levy –

The levy is payable to the Divisional Secretariat at the point of renewal of annual license on every motor vehicle which is over 03 years at the rate of Rs 5,000/- per year.

 

Motor Vehicle Licence Fee will be revised with effect from January 1, 2016.

 

Luxury & Semi-Luxury Motor Vehicle Tax : [Amendment of PART II of the Finance Act No. 16 of 1995]

 

Luxury & Semi-Luxury Motor Vehicle Tax will be removed with effect from April 1,2016.

 

 

Income Tax

Inland Revenue Act no. 24 of 2017

Effective from 1st April 2018

Meaning of Income Tax

“Tax” means a compulsory payment to the government imposed under Inland Revenue Act no. 24 of 2017 regardless of whether that payment is designated as a tax, fee, duty, levy or otherwise, and, unless the context otherwise requires, includes withholding tax, installments, interest, late fee, or penalty in relation to a tax;

 

Imposition of Income Tax 

Income tax shall be payable for each year of assessment by –

(a) a person who has taxable income for that year; or

(b) a person who receives a final withholding payment during that year.

 

Taxpayer Registration and Taxpayer Identification Numbers (TIN)

Voluntary Registration

Every person liable to furnish a return of income for a year of assessment, and who has not already registered, shall register with the Commissioner-General not later than thirty days after the end of the basis period for that year.

 

Compulsory Registration

The Commissioner-General shall register any person whom the Commissioner-General considers to have fulfilled the requirements for registration and assign the person a Taxpayer Identification Number. (TIN).

 

Tax Payable by Instalment

A person who is an “instalment payer” shall pay income tax by quarterly instalments if he derives or expects to derive assessable income during a year of assessment from a business or investment; or from an employment where the employer is not required to withhold tax.

 

An instalment payer shall pay instalments of income tax

  • Year ended 31st March

on or before the fifteenth day respectively of August, November and February in that year of assessment and the fifteenth day of May of the next succeeding year of assessment.

  • in any other case

on or before the fifteenth day after each three-month period commencing at the beginning of each year of assessment and a final instalment on or before the fifteenth day after the end of each year of assessment, unless it coincides with the end of one of the three-month periods.

 

Returns or Statement Furnish by Tax Payers

Statement of Estimated Tax Payable

Every person who is an instalment payer for a year of assessment under shall file with the Commissioner-General by the date for payment of the first tax instalment an estimate of tax payable for the year.

 

Return of income

Every person shall file with the Commissioner-General not later than eight months after the end of each year of assessment (on or before 30th November) a return of income for the year.

 

Capital Gains Tax Return

Every person with taxable income consisting of a gain from the realisation of an investment asset shall file with the Commissioner-General a capital gains tax return not later than one month after that realisation.

 

W.H.T. Annual Statement (Annual Return)

Every withholding agent shall file with the Commissioner General within thirty days after the end of each year ending on the thirty first day of March an Annual Statement.

 

Appointment of Representative

Every company carrying on business in Sri Lanka shall be represented by a principal officer residing in Sri Lanka and where there is none, by an authorised agent residing in Sri Lanka, and shall notify the Commissioner-General of its appointed representative within one month after it commences carrying on business in Sri Lanka, or one month after the representative ceases to qualify as such.

 

Non-payment or under payment of Income Tax

  • Liability for an Interest

If an amount of tax is not paid by the due date, the taxpayer shall be liable for interest on the amount for the period from the due date to the date the tax is paid. The interest rate for payments shall be one and one-half per cent per month or part month, compounded monthly.

  • Penalty 
  • Failure to register or notify of changes in taxpayer information

A person who fails to register as required or notify the Commissioner-General as required shall be liable for a penalty not exceeding fifty thousand rupees (Rs. 50,000).

  • Late filing of Tax Return

A person who fails to file a tax return on or before the date by which filing is required shall be liable to pay a penalty equal to the greater of—

(a) five per cent of the amount of the tax owing, plus a further one per cent of the amount of tax owing for each month or part of a month during which the failure to file continues; and

(b) fifty thousand rupees plus a further ten thousand rupees for each month or part of a month during which the failure to file continues.

The amount of the penalty shall be limited to four hundred thousand rupees (Rs. 400,000).

 (iii) Late payment

(1) A person who fails to pay all or part of a tax due for a tax period within fourteen days of the due date, or by the due date specified in the notice of assessment, if later, shall be liable to a penalty equal to twenty per cent of the amount of tax due but not paid.

(2) A person who fails to pay all or part of an instalment within fourteen days of the due date for the instalment shall be liable to a penalty equal to ten per cent of the amount of tax due but not paid.

  • Negligent or fraudulent underpayment

Where tax is underpaid, as a result of an incorrect statement or a material omission in a taxpayer’s tax return, and that statement or omission is a result of intentional conduct or negligence on the part of the taxpayer, the taxpayer shall be liable to a penalty in the amount of—

(a) twenty five per cent of the underpayment if paragraph (b) does not apply; or

(b) seventy five per cent of the underpayment if the amount of the underpayment is —

(i) higher than ten million rupees; or

(ii) higher than twenty five per cent of the person’s tax liability for the period.

  • Failure to maintain documents or provide facilities

A person who fails to maintain proper documents shall be liable for a penalty for each month or part of a month during which the failure continues. The penalty shall be one thousand rupees per day for each day the failure continues.

  • Failure to comply with third party notice

A person who fails to comply with a notice shall be liable for a penalty of twenty five per cent of the difference between the amount payable by the third party and the amount paid to the Commissioner General by the due date specified notice.

  • Failure to comply with notice to give information

A person who fails to comply with a request for information properly made, within the specified time, shall be liable for a penalty of an amount not exceeding one million rupees. (Rs. 1 Million)

 

Criminal Liabilities

  • Tax evasion

A person who wilfully evades or attempts to evade the assessment, payment or collection of tax or who wilfully and fraudulently claims a refund of tax to which the person is not entitled, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding ten million rupees (Rs. 10 Million) or to imprisonment for a term not exceeding two years or to both such fine and imprisonment.

  • Impeding tax administration

A person who wilfully impedes or attempts to impede the Department in the administration shall be guilty of an offence and shall be liable on conviction to a fine not exceeding one million rupees (Rs. 1 Million) or to imprisonment for a term not exceeding one year or to both such fine and imprisonment.

 

Income Tax Rates

Individual

Taxable income of Resident or non-resident individual for a year of assessment commencing form 1st April 2018 shall be taxed as follows,

First Rs. 600,000 – 4%

Next Rs. 600,000 – 8%

Next Rs. 600,000 – 12%

Next Rs. 600,000 – 16%

Next Rs. 600,000 – 20%

Balance – 24%

 

Company

Taxable income of a Company for a year of assessment commencing form 1st April 2018 shall be taxed as follows subject to conditions specified,

Small and Medium Enterprises – 14%

Export of goods and services – 14%

Agriculture Business – 14%

Education Services  – 14%

Promotion of Tourism – 14%

Information Technology Services – 14%

Betting and Gaming, Liquor and Tobacco – 14%

Others – 28%

 

 

 

Value Added Tax (VAT)

VAT Registration Threshold

w.e.f. 01.04.2016, the registration threshold will be Rs. 3m. for one month or three months and Rs. 12 m. for 12 months, excluding exempt supplies, excluded supplies and isolated transactions.

Wholesale or Retail sale of Goods

 

Under the Amendment Act No. 11 of 2015, the registration threshold has been reduced to Rs. 100m. for any period of 03 months, considering all supplies of goods taxable as well as exempt.

 

For any period commencing from 1st November 2016 the registration threshold is Rs. 12.5 m. for a period of any 03 months.

 

VAT Rate

From 01.01.2016 to 01.05.2016 – 11% (under Act No. 11 of 2015)

From 02.05.2016 to 11.07.2016 – 15%

From 12.07.2016 up to 31.10.2016 – 11%

From 1st November 2016 – 15%

 

VAT Returns

Every registered person shall furnish a return for each taxable period in the specified form –

  • before the end of the following month of the taxable period if it is a taxable period commencing prior to 01.01.2017.
  • within 06 months immediately succeeding the end of the taxable period if it is a taxable period commencing on or after 01.01.2017

 

 

 

Nation Building Tax (NBT)

 

Who should Pay

Importers, Manufacturers, Service Providers, and Whole sale and retail Trade – with effect from 1st January, 2011.

Registration threshold.

For any quarter commencing on or after 01.04.2016 – Rs. 3 m.

Where the liable turnover for the quarter commencing on 01.04.2016 exceeds Rs. 3. m. and does not exceed Rs. 3.75 m., the tax shall be charged only on the liable turnover accrued on or after 02.05.2016 but prior to 11.07.2016 (and on or after the date on which new Act comes in to force)

Special registration threshold given to the following activities w.e.f. 01.01.2011 (Rs. 25 m. or less per quarter) will not be applicable on or after 01.04.2016 –

  • operating a hotel, guest house, restaurant or other similar business.
  • providing educational services by any institution established
  • supply of labour (manpower).

From 01.04.2016 any person carrying on any of the above activities cannot enjoy the increased registration threshold.

Where the liable turnover for the quarter commencing on 01.04.2016 exceeds Rs. 3 m. and  does not exceed Rs. 25 m. the tax shall be charged only on the liable turnover accrued on or after 02.05.2016 but prior to 11.07.2016.(and on or after the date on which new Act comes in to force )

Rs. 25 m registration threshold will be applicable even after 01.04.2016 to any person engaged in the processing of any locally procured agricultural produce in the preparation for sale.

NBT Rate

Rate of NBT is 2%.

 

Credit for NBT 

NBT credit is available only for manufacturers on the purchases made from any other manufacturer who registered for NBT.

Economic Service Charge (ESC)

An Economic Service Charge shall be charged, if aggregate turnover from Trade, Business, Profession or Vocation carried on or exercised in Sri Lanka whether directly or through an agent or more than one agent, exceed Rs. Fifty Million (50M) for that relevant quarter of every year of assessment.

In relation to any relevant quarter commencing on or after April 1, 2012, where such part of taxable income as consists of profits from any trade, business, professional or vocation assessed under Inland Revenue Act for the year of assessment which ended immediately prior to the commencement of the year of assessment to which such quarter belongs, is more than zero, the relevant turnover for such quarter shall be deemed to be zero. This exclusion is removed from the year of assessment 2016/2017.

Liability to ESC in Default
Where the ESC or part thereof has defaulted by a company, every director or other principal officer of such company shall be deemed to be a defaulter and recovery actions will be taken by The Department of Inland Revenue against the defaulter.

Due date for the Payment of E S C & Furnishing of ESC Return
E. S. C. shall be paid on quarterly basis and due date shall be on or before by the 20th of following month ending relevant quarter.
Return of Economic Service Charge shall be furnished annual basis and due date is 20th day of April for any year of assessment ending on March 31st of that year.

Economic Service Charge with effect from 1st April 2016

  • The present exclusion of profit making businesses shall be removed.
  • The present maximum liability of Rs.120 million per year shall be removed.
  • The rate is increased from 0.25% to 0.5%.
  • Petrol, diesel and kerosene retail trade shall be liable for ESC if the aggregate turnover for a Quarter is Rs.50 million. Tax shall be calculated on 1/10th of the liable turnover of such trade.
  • ESC shall be charged in advance by the Commissioner General of Inland Revenue from the importers of items subject to Special Commodity Levy (SCL), on the CIF value of such imports, before clearance of such items from the Sri Lanka Customs, disregarding the threshold for ESC liability. The advance payment of ESC could be set off against the actual liability of ESC for the same year of assessment and not entitle for any refund.

 

 

 

Pay As You Earned – P.A.Y.E. Tax on Employment Income

Each Employer shall deduct P.A.Y.E. Tax in Sri Lanka on employment income of following employees at the time of Remuneration is paid including non – Cash benefits.

(i) All Employees who are Resident or Citizen of Sri Lanka
(ii) Company Chairman, Director or an Executive Officer
(iii) An individual who has more than one employment
(iv) Non – Citizen & Non – Resident Employees

Liability on PAYE in default
Where any employer has not deducted PAYE or has deducted but not remitted to The Department of Inland Revenue, every employer shall be personally liable for the entire amount of PAYE employer was required to deduct.

Penalty on Employer for non-compliance of certain requirements
Every employer who fails to comply with the following requirements shall be guilty of an offence and liable on conviction after summary trial before a Magistrate, to a fine not exceeding Rs. 10,000 or to imprisonment of either description for a term not exceeding six months, or to both such fine and imprisonment.
(i) Giving a notice to the Commissioner General about the specified employees employ by him – (Section 115 (1) & 115(2))
(ii) Deduction whole or any part of the income tax required to be deducted from the employees (Section 114 (1) )
(iii) Furnishing of PAYE Return (Section 112(1))
(iv) Deduction of tax as per the direction issued by the Commissioner General (Sec. 118(2))
(v) Employer to maintain records (Section 119)
(vi) Duties of the employer following the deduction of tax (Section 120)
Every employer makes an incorrect statements by omitting or understating the amount of remuneration of any employee or omits or understate the amount of income tax deducted from the remuneration of any employee, shall be guilty of an offence and shall be liable on conviction after summary trial before Magistrate, to a fine not exceeding Rs. 10,000 or to imprisonment of either description for a term not exceeding six months, or to both such fine and imprisonment (Section 202(5))
Penalty on Employee for non-compliance of certain requirements
Every employee fails to inform the Commissioner General when necessary deductions are not made by the employer, shall be guilty of an offence and shall be liable on conviction after summary trial before Magistrate, to a fine not exceeding Rs. 7,500. (Section 202(3))

Further, when he makes an incorrect statements shall be guilty of an offence and shall be liable on conviction after summary trial before Magistrate, to a fine not exceeding Rs. 10,000 or to imprisonment of either description for a term not exceeding six months, or to both such fine and imprisonment (Section 202(6)).

Motor Vehicle Importers License Fee

Motor Vehicle Importers License Fee shall be levied, for every year commencing on or after January 1, 2016, from every importer of motor vehicles, a fee to be called a Motor Vehicle Importers Licence Fee  of rupees one million five hundred thousand per annum:

any person who imports a motor vehicle for personnel use shall not be liable to pay the fee. The ownership of a motor vehicle imported for personal use, in respect of which the fee was not paid, shall not be transferred to a second owner, for a period of four years from the date of the registration of such motor vehicle in the name of the importer, unless such importer proves to the satisfaction of the Commissioner General of Motor Traffic that there is no commercial purpose involved.

Migrating Tax

With effect from November 1, 2015, from any citizen of Sri Lanka who permanently leaves Sri Lanka, Migrating Tax shall be charged at the rate of twenty per centum on the foreign exchange released to be taken out of the country by such citizen. The tax shall be collected by the Commissioner General.

Definition

“Citizen of Sri Lanka” has the same meaning assigned to such expression under the Citizenship Act (Chapter 349 ).

Construction Industry Guarantee Fund Levy

CIGFL is payable by any “Construction Contractor” or “Sub Contractor” on the “value of any construction contract” enforced in Sri Lanka (on or after January 1, 2005) at the specified appropriate rate.

However, no CIGFL shall be charged on any construction contract to be entered into and enforced in Sri Lanka by any construction contractor, on their contract value in respect of contracts for the implementation of specified projects approved by the Minister of Finance, entered into from and after January 1, 2011. (PART IV of the Finance (Amendment) Act No 15 of 2011)

Rates of CIGFL are as follows.

Value of Contract                                                                                  Rate

Less than Rs. 15 m                                                                               Nil

Not less than Rs. 15 m but less than Rs. 50 m                                0.25%

Not less than Rs. 50 m but less than Rs. 150 m                              0.5%

Rs. 150 m or more                                                                                 1%

Share Transaction Levy

With effect from April 1, 2005, a levy on buying or selling of shares through the Stock exchange has been charged at a rate was 0.2% of the price at the time buying and 0.2% at the time of selling.

However, rate of 0.2% has increased to 0.3% with effect from January 1, 2011.

Tourist Board Development Levy – TDL

Every institution licensed under the Tourist Development Act No. 14 of 1968 other than Travel Agents shall

pay Tourist Development Levy (TDL) at a rate of 1% on total turnover after deducting Value Added Tax and

Service Charges.

Definition of Turnover

Tourist Hotel

Turnover is calculated as the sum received or receivable from the total sales, excluding the service charge, up to 10% of such sales and the value added tax charged, on such sales in terms of the Value Added Tax Act, No.14 of 2002.

Travel Agent

Turnover is determined by the total receipts from services provided in relation to the tourist industry, excluding payments made by the Travel Agent, in respect, of services provided to him by other local service providers and the value added tax charged on such sales in terms of the Value Added Tax Act No. 14 of 2002.

Tourist Shop

The turnover would amount to the sums received or receivable from the total sales of products from any such shop, excluding the value added tax charged on such sales in terms of the Value Added Tax Act, No.14 of 2002.

Port and Air Port Development Levy (P.A.L.)

PAL shall be charged on C I F value of imports items other than specifically exempted articles.

With effect from 1st January 2016 rate of PAL increased from 5% to 7.5% . To encourage spending by tourists PAL rate reduced from 5% to 2.5% on certain electronic and electrical items. The rate of 5% on certain machinery removed.

Tax on Prize Competition – Western Province

With effect from 15th April 2008 tax on Prize Competitions, within Western Province, has been amended

and new tax rates are as follows:

Total value of the prizes                 Pro Rate Tax
Less than Rs. 100,000                       Exempt

Rs. 25 M or less                                  3%

More than Rs. 25 M                             5%

 

Seminar on VAT, NBT & IT – 2016

Seminar on VAT, NBT & IT held on 2nd November 2016 at Sri Lanka Foundation Institute.

 

Business Turnover Tax

Business Turnover Tax abolished in Sri Lanka with effect from 1st January, 2011 and such Trading Businesses are liable for Nation Building Tax (NBT).

Rates Charged are as follows,
All businesses engaged in buying and selling of articles and commodities other than exempt items are liable to turnover tax on or before 31st December 2010.

Rates are as follows

(a) Sale of Gems, sawan timber and precious and semi precious stones, furniture 5%

(b) Sale of Jewellery 5%

(c) Sale of other articles 1%