FINANCE ACT – 2018

Arrangement of Sections

1. Short title.

PART I
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 25 OF 2003

2. Amendment of section 11 of Act, No. 25 of 2003.

3. Amendment of section 12 of the principal enactment.

PART II
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 5 OF 2005

4. Amendment of section 7 of Act, No. 5 of 2005.

PART III
AMENDMENT OF PART III OF THE FINANCE ACT, NO. 5 OF 2005

5. Amendment of section 13 of Act, No. 5 of 2005.

6. Amendment of section 13A of the principal enactment.

7. Retrospective effect.

PART IV
AMENDMENT OF PART IV OF THE FINANCE ACT, NO. 12 OF 2012

8. Amendment of section 18A of Act, No. 12 of 2012.

9. Amendment of the Schedule to the principal enactment.

10. Application of the provisions of this Part.

PART V
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 16 OF 1995

11. Amendment of section 3 of Act, No. 16 of 1995.

12. Amendment of section 4 of the principal enactment.

13. Amendment of section 5 of the principal enactment.

14. Amendment of section 8 of the principal enactment.

15. Amendment of section 8A of the principal enactment.

16. Insertion of new section 8B in the principal enactment.

PART VI
AMENDMENT OF THE FINANCE ACT, NO. 10 OF 2015

17. Repeal of Part VII of Act, No. 10 of 2015.

18. Repeal of Part IX of the principal enactment.

PART VII
IMPOSITION OF LUXURY TAX ON MOTOR VEHICLES

19. Imposition of Luxury Tax on motor vehicles.

20. Collection of tax at the time of importation.

21. Collection of tax at the time of registration.

22. Certain vehicles to be exempted from the payment of the tax.

23. Interpretation.

PART VIII
IMPOSITION OF Vehicle Entitlement levy

24. Imposition of Vehicle Entitlement Levy.

25. Collecting the levy for the period commencing from January 1, 2016 to January 1, 2019.

26. Collecting the levy for any period commencing on or after January 1, 2019.

27. Certain vehicles to be exempted from the payment of the levy.

28. Validation.

29. Amendment of the rates of the levy by resolution of Parliament.

30. Interpretation.

PART IX
ANNUAL COMPANY REGISTRATION LEVY

31. Imposition of Annual Company Registration Levy.

32. Certain companies to be exempted from payment of the levy.

33. Default in payment of the levy.

34. Recovery of the levy in default.

35. Validation.

PART X
DEBT REPAYMENT LEVY

36. Imposition of Debt Repayment Levy.

37. Exemption from the default in payment of the levy.

38. Default in payment of the levy.

39. Interpretation.

PART XI
CARBON TAX

40. Imposition of Carbon Tax.

41. Registered owner to pay the tax.

42. Amendment of the rates of the tax by resolution of Parliament.

43. Interpretation.

PART XII
CELLULAR TOWER LEVY

44. Imposition of Cellular Tower Levy.

45. Default in payment of the levy.

46. Recovery of the levy in default.

47. Interpretation.

PART XIII
IMPOSITION OF LEVY ON MOBILE SHORT MESSAGE SERVICES

48. Imposition of levy on mobile short message services.

49. Interpretation.

PART XIV
GENERAL

50. Default by body of persons.

51. Regulations.

52. Sinhala text to prevail in case of inconsistency.

SCHEDULES

 

35 of 2018.

AN ACT to amend the Finance Act, No. 25 of 2003, the Finance Act, No. 5 OF 2005, the Finance Act, No. 12 of 2012, the Finance Act, No. 16 of 1995, and the Finance Act, No. 10 of 2015; and to provide for the imposition of Luxury Tax on Motor Vehicles, Vehicle Entitlement Levy, Annual Company Registration Levy, Debt Repayment Levy, Carbon Tax, Cellular Tower Levy and Mobile Short Message Service Levy; and to provide for matters connected therewith and incidental thereto.

[Date of Commencement: 2nd November 2018]

1. Short title.

This Act may be cited as the Finance Act, No. 35 of 2018.

PART I
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 25 OF 2003

2. Amendment of section 11 of Act, No. 25 of 2003.

Part II (Imposition of Tourism Development Levy) of the Finance Act, No. 25 of 2003 (hereinafter in this Part referred to as the “principal enactment”) is hereby amended in section 11—

(1) by the renumbering of section 11 as subsection (1) thereof;

(2) in the second proviso of renumbered subsection (1) by the substitution for the words “rupees three million” of the words “rupees three million, for the period ending on December 31, 2018.”;

(3) by the insertion immediately after the second proviso to that subsection of the following new proviso—

“Provided further, from and after January 1, 2019, such levy shall be charged from any institution having an annual turnover of not exceeding rupees twelve million or a quarterly turnover not exceeding rupees three million at the rate of 0.5 per centum on such turnover of such institution.”;

(4) by the insertion immediately after renumbered subsection (1), of the following new subsection—

“(2) From and after January 1, 2019, there shall be levied from every institution licensed under the Tourism Act, No. 38 of 2005 a levy of one per centum on the turnover of such institutions in any year, to be called the Tourism Development Levy:

Provided however, such levy shall not be charged on the commission carried on the sale of airline tickets from Travel Agents including General Sales Agents licensed under the Tourism Act, No. 38 of 2005:

Provided further, such levy shall be charged from any institution having an annual turnover of not exceeding rupees twelve million or a quarterly turnover not exceeding three million, at the rate of 0.5 per centum on such turnover of such institution.”; and

(5) by the repeal of the marginal note of that section and the substitution therefor of the following—

“Imposition of Levy on institutions, licensed under Tourism Development Act and Tourism Act”.

3. Amendment of section 12 of the principal enactment.

Section 12 of the principal enactment is hereby amended by the repeal of subsection (2) thereof and the substitution therefor, of the following subsections—

“(2) The Director General of the Ceylon Tourist Board shall—

(a) retain the levy so collected under subsection (1), other than the levy collected from the online travel agents licensed under the Tourism Act, No. 38 of 2005 and the levy collected at the rate of 0.5 per centum under section 11; and

(b) remit the levy collected from the online travel agents licensed under the Tourism Act, No. 38 of 2005 and the levy collected at the rate of 0.5 per centum under section 11, to the Consolidated Fund.

(3) The Director General of the Ceylon Tourist Board shall furnish such returns in such manner as may be prescribed in that behalf to the Deputy Secretary to the Treasury, within thirty days of the date on which such amount is collected.”.

PART II
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 5 OF 2005

4. Amendment of section 7 of Act, No. 5 of 2005.

Part II (Imposition of Share Transaction Levy) of the Finance Act, No. 5 of 2005, is hereby amended in section 7 thereof, by the repeal of paragraph (b) thereof and the substitution therefor of the following paragraphs—

“(b) for any period commencing on or after January 1, 2011, but prior to January 1, 2016, at the rate of 0.3 per centum; and

(c) for any period commencing on or after April 1, 2016, at the rate of 0.3 per centum,”.

PART III
AMENDMENT OF PART III OF THE FINANCE ACT, NO. 5 OF 2005

5. Amendment of section 13 of Act, No. 5 of 2005.

Part III (Imposition of Construction Industry Guarantee Fund Levy) of the Finance Act, No. 5 of 2005 (hereinafter in this Part referred to as the “principal enactment”) is hereby amended in subsection (1) of section 13, by the substitution for the words “for every year thereafter,” of the words and figures “for every year thereafter until December 31, 2015,”.

6. Amendment of section 13A of the principal enactment.

Section 13A of the principal enactment is hereby amended in subsection (1), by the substitution for the words and figures “any payment on or after April 1, 2009 to any construction contractor or sub-contractor,” of the words and figures “any payment on or after April 1, 2009 but prior to January 1, 2016 to any construction contractor or sub-contractor,”.

7. Retrospective effect.

The amendments made to the principal enactment by this Part of this Act, shall be deemed for all purposes to have come into force on January 1, 2016.

PART IV
AMENDMENT OF PART IV OF THE FINANCE ACT, NO. 12 OF 2012

8. Amendment of section 18A of Act, No. 12 of 2012.

Part IV (Exemption from Application of the provisions of Customs Ordinance (Chapter 235), Exchange Control Act (Chapter 423) and the Imports and Exports (Control) Act, No. 1 of 1969) of the Finance Act, No. 12 of 2012, (hereinafter in this Part referred to as the “principal enactment”) is hereby amended in subsection (1) of section 18A thereof, by the substitution for the words “any enterprise engaged in” of the words “enterprises or certain enterprises as specified in that Schedule engaged in”.

9. Amendment of the Schedule to the principal enactment.

The Schedule to the principal enactment is hereby amended, by the substitution for item 1 thereof, of the following item—

“1. Value Added Tax Act, No. 14 of 2002 (other than an enterprise which carries out activities which are treated as zero rated activities within the meaning of the provisions of Value Added Tax Act and for which the provisions of paragraph (e) of subsection (2) of section 2 of the said Act are applicable on local purchase of goods or services under Simplified Value Added Tax Scheme referred to in that paragraph);”.

10. Application of the provisions of this Part.

The amendments made to the principal enactment by this Part of this Act shall come into operation on the date of commencement of this Act.

PART V
AMENDMENT OF PART II OF THE FINANCE ACT, NO. 16 OF 1995

11. Amendment of section 3 of Act, No. 16 of 1995.

The Finance Act, No. 16 of 1995 (hereinafter in this Part, referred to as the “principal enactment”) is hereby amended in subsection (1) of section 3 thereof, by the substitution for the words “every luxury motor vehicle (other than a semi-luxury dual purpose motor vehicle or a wagon)—” of the words and figures “every luxury motor vehicle (other than a semi-luxury dual purpose motor vehicle or a wagon) of which the first year of registration falls prior to January 1, 2019—”.

12. Amendment of section 4 of the principal enactment.

Section 4 of the principal enactment is hereby amended in subsection (1) thereof, by the substitution for the words “every semi-luxury motor vehicle (other than a semi-luxury dual purpose motor vehicle or a wagon)—” of the words and figures “every semi-luxury motor vehicle (other than a semi-luxury dual purpose motor vehicle or a wagon) of which the first year of registration falls prior to January 1, 2019—”.

13. Amendment of section 5 of the principal enactment.

Section 5 of the principal enactment is hereby amended in subsection (1) thereof, by the substitution for the words “every semi-luxury dual purpose motor vehicle (other than a wagon)—” of the words and figures “every semi-luxury dual purpose motor vehicle (other than a wagon) of which the first year of registration falls prior to January 1, 2019—”.

14. Amendment of section 8 of the principal enactment.

Section 8 of the principal enactment is hereby amended in subsection (1) thereof, by the substitution for the words “any specified motor vehicle” of the words and figures “any specified motor vehicle, of which the payment due date of the levy falls prior to January 1, 2019,”.

15. Amendment of section 8A of the principal enactment.

Section 8A of the principal enactment is hereby amended by the substitution for the words “any specified motor vehicle” of the words and figures “any specified motor vehicle, of which the payment due date of the levy falls prior to January 1, 2019,”.

16. Insertion of new section 8B in the principal enactment.

The following new section is hereby inserted immediately after section 8A and shall have effect as section 8B of the principal enactment—

8B. Levy to be collected at the time of renewal of registration.

(1) Every Divisional Secretary who renews an annual revenue licence in respect of any specified motor vehicle of which the payment due date of the levy falls on or after January 1, 2019, shall, at the time of renewing the annual revenue licence, collect from the registered owner of such motor vehicle an amount equal to such levy and remit the amount so collected to the Commissioner-General who shall credit the same to the Consolidated Fund.

(2) Every Divisional Secretary who collects the levy under subsection (1) shall send a monthly report to the Commissioner-General in such form and containing such particulars as may be specified by the Commissioner-General in respect of the levy so collected and remitted to the Consolidated Fund.

(3) Every Divisional Secretary who collects the levy in accordance with the provisions of subsection (1), shall duly acknowledge the receipt of the levy so collected, in such manner as may be specified by the Commissioner-General.

(4) Any levy so collected by any Divisional Secretary in accordance with the provisions of subsection (1), shall be deemed to have been paid by such registered owner to the Commissioner-General on the date on which such Divisional Secretary collected such levy.”.

PART VI
AMENDMENT OF THE FINANCE ACT, NO. 10 OF 2015

17. Repeal of Part VII of Act, No. 10 of 2015.

Part VII (Mansion Tax) of the Finance Act, No. 10 of 2015 (hereinafter in this Part referred to as the “principal enactment”) is hereby repealed.

18. Repeal of Part IX of the principal enactment.

Part IX (Motor Vehicle Importers Licence Fee) of the principal enactment is hereby repealed, with effect from January 1, 2016.

PART VII
IMPOSITION OF LUXURY TAX ON MOTOR VEHICLES

19. Imposition of Luxury Tax on motor vehicles.

There shall be charged, a tax to be called the “Luxury Tax” (hereinafter in this Part referred to as “the tax”) on every specified motor vehicle of which the first year of registration falls on or after the date, and at the rates, as may be prescribed by regulations made under this Act.

20. Collection of tax at the time of importation.

(1) The tax payable under section 19 on any specified motor vehicle imported into Sri Lanka on or after the date prescribed under section 19, shall be paid to the Director-General of Customs, by the person importing such vehicle, at the time of removing the vehicle from Sri Lanka Customs, together with the import duties payable in respect of such vehicle in terms of any written law.

(2) The provisions of the Customs Ordinance (Chapter 235) applicable for the collection and recovery of any customs duty, shall, mutatis mutandis, apply for the collection and recovery of the tax under this section.

21. Collection of tax at the time of registration.

(1) The tax payable under section 19 on any specified motor vehicle imported into Sri Lanka prior to the date prescribed under section 19, or assembled in Sri Lanka shall be paid by the registered owner of such vehicle to the Commissioner-General at the time of issuing the first Certificate of Registration in respect of such vehicle.

(2) The Commissioner-General shall remit the tax collected under subsection (1) to the Consolidated Fund.

22. Certain vehicles to be exempted from the payment of the tax.

Nothing in this Part shall apply to any specified motor vehicle providing services to a Diplomatic Mission of any State within the meaning of the Diplomatic Privileges Act, No. 9 of 1996 or to an International, Multilateral or Bilateral Organisation recognised in terms of that Act.

23. Interpretation.

In this Part of this Act, unless the context otherwise requires—

“Commissioner-General” means the Commissioner-General of Motor Traffic appointed under the Motor Traffic Act (Chapter 203);

“Director-General of Customs” means the Director-General of Customs appointed under section 2 of the Customs Ordinance (Chapter 235);

“specified motor vehicle” means any assembled or unassembled diesel motor vehicle of which the cylinder capacity exceeds 2,300 CC or a petrol motor vehicle of which the cylinder capacity exceeds 1,800 CC or an electric vehicle of which motor power of the engine exceeds 200 Kw, but shall not include a dual purpose petrol motor vehicle the cylinder capacity of which does not exceed 2,200 CC, dual purpose electric motor vehicle, a van, a single cab or a wagon.

PART VIII
IMPOSITION OF VEHICLE ENTITLEMENT LEVY

24. Imposition of Vehicle Entitlement Levy.

There shall be charged with effect from January 1, 2016, a levy to be called the “Vehicle Entitlement Levy” (hereinafter in this Part referred to as “the levy”) from every importer of motor vehicles, who imports a motor vehicle specified in the First Schedule hereto, at the respective rates set out in that Schedule for each category of vehicle identified under the harmonised commodity description and coding system numbers:

Provided however, an importer of vehicle who imports such vehicle in unassembled form shall not be liable to pay the levy.

25. Collecting the levy for the period commencing from January 1, 2016 to January 1, 2019.

(1) The levy payable for any period commencing on January 1, 2016 but ending prior to January 1, 2019 shall have been collected by the bank at which the Letter of Credit in respect of the vehicle imported is opened, at the time of opening such Letter of Credit and shall be remitted in the manner specified in subsection (2) by such bank to the Commissioner-General.

(2) The levy collected by the bank within the period commencing—

(a) on the 1st day of any month to the 15th day of that month shall have been remitted on or before the end of that month; and

(b) on the 16th day of any month to the end of that month shall have been remitted on or before the 15th day of the succeeding month,

to the Commissioner-General.

(3) Every bank which remit the levy in terms of the preceding provisions of this section shall, submit a statement setting out the following, to the Commissioner-General

(a) the name and address of each importer relating to each remittance;

(b) category of the vehicle;

(c) value of the Letter of Credit;

(d) amount collected; and

(e) any other details as may be required by the Commissioner-General, from time to time.

(4) Any bank which collects the levy from any importer shall issue a copy of the Letter of Credit to such importer certifying that the levy has been paid. Any vehicle imported on a Letter of Credit opened on or after January 1, 2016 shall not be allowed to be removed from the Sri Lanka Customs, unless the importer submits the copy of the Letter of Credit which is endorsed by the bank.

(5) In any event where the Letter of Credit is cancelled and a refund being requested by the importer who has paid the levy on such Letter of Credit, prior to the remittance of such levy to the Commissioner-General, the bank may refund the levy so paid.

26. Collecting the levy for any period commencing on or after January, 2019.

(1) The levy payable under section 24 for any period commencing on or after January 1, 2019, on any vehicle in respect of which the Letter of Credit has been opened on or after January 1, 2019 and imported into Sri Lanka, shall be paid by the importer of the vehicle to the Director-General of Customs, at the time of removing the vehicle from Sri Lanka Customs together with the import duties payable in respect of such vehicle in terms of any written law.

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