PARLIAMENT OF THE DEMOCRATIC SOCIALIST …

1 PARLIAMENT OF THE DEMOCRATICSOCIALIST REPUBLIC OFSRI LANKAVALUE ADDED TAX (AMENDMENT)ACT, No. 11 OF 2015 Printed on the Order of Government[Certified on 30th October, 2015]PRINTED AT THE DEPARTMENT OF GOVERNMENT PRINTING, SRI LANKATO BE PURCHASED AT THE GOVERNMENT PUBLICATIONS BUREAU, COLOMBO 5 Price : Rs. : Rs. as a Supplement to Part II of the Gazette of the DemocraticSocialist Republic of Sri Lanka of October 30, 20151 Value Added Tax (Amendment)Act, No. 11 of 2015 Short title andthe date PL 009229 2950 (09/2015)[Certified on 30th October, 2015] O. 16/2015AN ACT TO AMEND THE VALUE ADDED TAX ACT, NO. 14 OF 2002BE it enacted by the PARLIAMENT of the DEMOCRATIC SocialistRepublic of Sri Lanka as follows:-1.(1) This Act may be cited as the Value Added Tax(Amendment) Act, No. 11 of 2015 and subject to subsection(2) of this section, shall be deemed to have come intooperation on January 1, 2015 unless the date on whichcertain provisions shall come into operation are specified insuch sections.

2 (2) The amendments made to section 17, 19, 21, 25A(5),26, 28, 34, 41, 44, 47 and 66 by this Act shall come intooperation on such date as the Minister may appoint by Orderpublished in the 2 of the Value Added Tax Act, of 2002(hereinafter referred to as the principal enactment ) is herebyamended as follows:-(1) in item (iii) of sub-paragraph (v) of subsection (1)of that section by the repeal of the words and figures (iii) for the period commencing on up to the words at zero per centum and the substitution thereforof the following:- (iii) for the period commencing on November23, 2010 and ending on December 31, 2010and for any taxable period commencing onor after January 1, 2011, and ending onDecember 31, 2014, at the rate of twelveper centum (of which the tax fraction is3/28); andAmendment ofsection 2 of theValue AddedTax Act, Added Tax (Amendment)Act, No.

3 11 of 2015(iv) for any taxable period commencing on orafter January 1, 2015 at the rate of eleven percentum (of which the tax fraction is 11/111),on the value of such goods or services supplied, orgoods imported, other than the goods or serviceschargeable with tax at zero per centum ; and(2) by the repeal of item (vi) of sub-paragraph (e) ofsubsection (2) of that section and the substitutiontherefor of the following new sub-paragraph:- (vi)any person registered under the provisionsof subsection (7) of section 22 of this Act,including any strategic developmentproject in terms of subsection (4) of section3 of the Strategic Development Project Act, of 2008, as is referred to in sub-paragraph (i) of paragraph (f) of Part II of theFirst Schedule where purchases are allowedto be made from persons registered forSimplified Value Added Tax Scheme,during the project implementation periodinsofar as such supplies are project relatedsupplies.

4 (3) in sub-paragraph (e) of subsection (2) of that section,by the substitution for the words such purposeand which are specified in the Order published inthe Gazette. of the words such purpose andpublished in the Gazette..3. Section 3 of the principal enactment is herebyamended as follows:-(1) in paragraph (f) of subsection (1) of that section, bythe repeal of the words (f) any person or partnership up to the words Part II of the First Schedule. andthe substitution therefor of the following:- (f) any person or a partnership having totalsupplies of goods for any consecutive periodAmendment ofsection 3 of Added Tax (Amendment)Act, No. 11 of 2015of three months in any calendar year notless than rupees (i) five hundred million, for any suchperiod of three months falling withinany period commencing on or afterJanuary 1, 2013, but ending on orbefore December 31, 2013;(ii)two hundred and fifty million, for anysuch period of three months fallingwithin any period commencing on orafter January 1, 2014, but ending onor before December 31, 2014; and(iii)one hundred million, for any suchperiod of three months falling withinany period commencing on or afterJanuary 1, 2015,including the supplies under the precedingparagraphs of this section and any suppliesexempted under Part II of the First Schedule.

5 ;(2) in paragraph (i) of subsection (2) of that section, bythe substitution for the words for the purposes ofthis Act of the words the substitution for the words for the purposes of this Act, including any businessin which any director of a company or partner of apartnership is a director or partner of such otherbusiness or businesses; and . 5 of the principal enactment is herebyamended by the repeal of subsection (10) of that section andthe substitution therefor of the following new subsection:- (10) For any period-(a) prior to October 25, 2014, where any goodssupplied under a lease agreement issubsequently transferred to the lessee at theAmendment ofsection 5 of Added Tax (Amendment)Act, No. 11 of 2015termination of such agreement for aconsideration not exceeding ten per centumof the total consideration of the leaseagreement, such consideration shall bedeemed to be a lease rental recovered undersuch agreement, and where such considerationis more than ten per centum of the totalconsideration of the lease agreement, suchsupply shall be deemed to be a separatesupply.

6 (b) on or after October 25, 2014, where any goodssupplied under a lease agreement issubsequently transferred to the lessee at thetermination of such agreement for aconsideration, such consideration shall betreated as a lease rental obtained under suchlease agreement.. 7 of the principal enactment is herebyamended by the repeal of sub-paragraph (vii) of paragraph(b) of subsection (1) of that section and the substitutiontherefor of the following new sub-paragraph:- (vii) the provision of services to overseas buyers by agarment buying office registered with the TextileQuota Board established under the Textile QuotaBoard Act, of 1996 or the Simplified ValueAdded Tax Scheme, as the case may be, wherepayment for such service is received in foreigncurrency, through a bank in Sri Lanka in so far assuch services are identified by the Commissioner-General as being services essential for facilitatingthe export of garments to such overseas buyers.

7 8 of the principal enactment is herebyamended by the repeal of the first proviso to that section andthe substitution therefor of the following new proviso:- Provided that, in the case of a registered person referredto in paragraph (f) of section 3 of this Act, the value of theAmendment ofsection 7 of ofsection 8 of Added Tax (Amendment)Act, No. 11 of 2015supply of goods exempted under this Act made by suchregistered person directly or on behalf of any other person,which is in excess of twenty five per centum of the value oftotal supply of goods of such registered person other thanthe value of the supply of-(a) zero rated articles;(b) locally produced fresh milk, and with effct fromNovember 1, 2015 locally grown fruits andvegetables or locally produced rice; and(c) goods subject to Special Commodity Levy wherethe supply is made by the importer himself, shallnotwithstanding the provisions contained in theSpecial Commodity Levy Act, No.

8 48 of 2007,be deemed to be treated as liable supplies of such registeredperson and chargeable to tax at the rate specified in section2 of this Act using the tax fraction on the tax inclusiveconsideration: . 10 of the principal enactment is herebyamended as follows:-(1) in subsection (1) of that section (i) in paragraph (iii), by the substitution forthe words and figures (iii) on or afterJanuary 1, 2013, carries on of the words andfigures (iii) on or after January 1, 2013, butprior to January 1, 2015 carries on .(ii) by the insertion immediately after paragraph(iii), of the following new paragraph:- (iv) on or after January 1, 2015 carries onor carries out any taxable activity inAmendment ofsection 10 of Added Tax (Amendment)Act, No. 11 of 2015 Sri Lanka shall be required to beregistered under this Act, if-(a) at the end of any taxable periodof one month or three months, asthe case may be, the total valueof the taxable supplies of goodsor services or goods and servicesof such person, made in Sri Lankain that taxable period of onemonth or three months, as thecase may be, has three millionseven hundred and fifty thousandrupees; or(b) in the twelve months period thenending, the total value of thetaxable supplies of goods orservices or goods and services ofsuch person, made in Sri Lankahas exceeded fifteen millionrupees.

9 Or(c) at any time, there are reasonablegrounds to believe that the totalvalue of the taxable supplies ofgoods or services or goods andservices of such person inSri Lanka, in the succeeding onemonth or three months taxableperiod, as the case may be, islikely to exceed three millionseven hundred and fifty thousandrupees or in the succeedingtwelve months period is likely toexceed fifteen million rupees..(2) in subsection (2) of that section, by the substitutionfor the words is not less than rupees two hundred7 Value Added Tax (Amendment)Act, No. 11 of 2015and fifty million. of the words and figures is notless than rupees-(a) five hundred million for any such period ofthree months falling within any periodcommencing on or after January 1, 2013, butending on or before December 31, 2013;(b) two hundred and fifty million for any suchperiod of three months falling within theperiod commencing on or after January 1,2014 but ending on or before December 31,2014; and(c) one hundred million for any such period ofthree months commencing on or after January1, 2015.

10 16 of the principal enactment is herebyamended as follows:-(1) in subsection (2) of that section, by the substitutionfor the words protection of revenue, cancel hisregistration. of the words protection of revenue,cancel his registration or list such registration asan inactive registration for the purposes of this Actuntil further inquiries are made prior to suchcancellation..(2) by the repeal of subsection (2A) of that section andthe substitution therefor of the following newsubsection:- (2A) Where the Commissioner-General-(a) cancels any registration undersubsection (2), he shall cause a list ofnames and the registration numbers ofsuch registered persons to be publishedAmendment ofsection 16 of Added Tax (Amendment)Act, No. 11 of 2015in three daily newspapers in Sinhala,Tamil and English languages, having awide circulation; or(b) decides such registration as inactive,shall publish the names and registrationnumbers of the persons whoseregistration has been decided asinactive in the official web site of theDepartment of Inland Revenue and thelist so published shall be updated onmonthly basis, notwithstanding theprovisions of section 73.