Inland Revenue (Amendment) Act

• Coming into Force: 08 May 2023
• Act Number: 4

AN ACT TO AMEND THE INLAND REVENUE ACT, NO. 24 OF 2017 BE it enacted by the Parliament of the Democratic Socialist Republic of Sri Lanka as follows:-

Short title and the date of operation 1 (1) This Act may be cited as the Inland Revenue (Amendment) Act, No. 4 of 2023. (2) The provisions of this section and sections 2, 4, 7, 8, 9, 11, 13, 15, 16, 19 and 22 of this Act shall come into operation on the date on which the Bill becomes an Act of Parliament. (3) The provisions of this Act specified in Column I of the table below which amend the provisions of the Inland Revenue Act, No. 24 of 2017 (hereinafter referred to as the "principal enactment") specified in Column II of that table shall come into operation or be deemed to have come into operation, as the case may be, on the respective dates as specified in Column III of that table.

Amendment of section 10 of the principal enactment 2. Section 10 of the principal enactment is hereby amended by the insertion immediately after subsection (2) of that section, of the following new subsection: - (2A) (a) Where a person pays to another person, on or after the date of commencement of this (Amendment) Act, a sum of money amounting in the aggregate to Rs. 500,000 or more, in a day, or in respect of a single transaction, or in respect of a series of single transactions relating to one event, otherwise than by way of an account payee cheque or account payee bank draft or by the use of a credit card, debit card or electronic payment system through a bank account- (i) any deduction shall not be allowed in respect of such payments in calculating the first mentioned person's income; and (ii) the amounts paid shall not be considered as cost of an asset of the first mentioned person. (b) The provisions of paragraph (a) shall not apply to- (i) any payment by the Government of Sri Lanka or any Government institution; (ii) any payment by a bank or financial institution; and (iii) such classes of persons or payments as may be prescribed by the Minister. (c) For the purpose of this subsection- "bank account" means any account maintained in a bank or financial institution in Sri Lanka; "Government institution" means any Department or undertaking of the Government of Sri Lanka and includes any public corporation; and "single transaction" means the purchase or procurement of any goods or services, on a single invoice, receipt or statement.".

Amendment of section 37 of the principal enactment 3. Section 37 of the principal enactment is hereby amended in paragraph (b) of subsection (1) of that section, by the substitution for the words "the asset;", of the words and figures "the asset prior to April 1, 2021 and in improving the asset on or after April 1, 2021;".

Amendment of section 73 of the principal enactment 4. Section 73 of the principal enactment is hereby amended in paragraph (a) of subsection (1) of that section as follows:- (1) in sub-paragraph (i) of that paragraph, by the substitution for the words "paid; or", of the word "paid;"; (2) in sub-paragraph (ii) of that paragraph, by the substitution for the words "employment is;", of the words "employment is; or"; and (3) by the addition immediately after sub-paragraph (ii) of that paragraph, of the following new subparagraph:- "(iii) to the extent derived from a company resident and conducting the business in Sri Lanka;".

Amendment of section 84A of the principal enactment 5. Section 84A of the principal enactment is hereby amended by the insertion immediately after subsection (1A) of that section, of the following new subsection:- "(1B) For the purpose of subsection (1A), "a person" includes the Government of Sri Lanka, in the case of a payment made to a non-resident person other than a payment derived through a Sri Lankan permanent establishment.".

Amendment of section 85 of the principal enactment 6. Section 85 of the principal enactment is hereby amended by the addition immediately after subsection (3) of that section, of the following new subsection: - "(4) For the purpose of this section, "a person" includes the Government of Sri Lanka, in the case of a payment made to a non-resident person other than a payment derived through a Sri Lankan permanent establishment.".

Amendment of section 86 of the principal enactment 7. Section 86 of the principal enactment is hereby amended by the addition immediately after subsection (6) of that section, of the following new subsections: - "(7) The Commissioner-General may specify the procedure of withholding the tax from any payment made to a non-resident person under this Division. Every withholding agent and financial institution shall comply with such procedure. (8) Every withholding agent who has deducted Advance Income Tax under the provisions of section 84A shall file with the Commissioner-General a quarterly statement as specified by the CommissionerGeneral, within thirty days after the end of each quarter, ending on the thirtieth day of June, thirtieth day of September and thirty first day of December.".

Amendment of section 100 of the principal enactment 8. Section 100 of the principal enactment is hereby amended in subsection (1) of that section, by the insertion immediately after paragraph (b) of that subsection, of the following new paragraph:- "(bb) the Director-General of the Department of Fiscal Policy, for the purpose of making decisions on the tax policy and Government revenue;".

Insertion of new section 111A in the principal enactment 9. The following new section is hereby inserted immediately after section 111 of the principal enactment, and shall have effect as section 111A of that enactment:- "Opinion of the Secretary to the Treasury on underlying tax policy111A. The Commissioner-General may obtain opinion or observation of the Secretary to the Treasury on the underlying tax policy relating to any provision of this Act, for the purpose of interpretation of such provisions under this Division or Division III of this Chapter, or for any tax Act administered by the Commissioner-General.".

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