BUDGET - 2015 - Department of Inland Revenue

DEPARTMENT OF INLAND REVENUE
BUDGET - 2015
IMPLEMENTATION OF THE PROPOSED AMENDMENTS TO:
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Value Added Tax Act No 14 of 2002;
Nation Building Tax Act No 09 of 2009;
Betting and Gaming Levy Act No 40 of 1988; and
Default Tax Recovery ( Special Provisions) Act No 16 of 2010
providing refinance facility Scheme to settle post 2010 taxes in default
The following proposals announced in the Budget 2015 will be implemented with effect from
January 01, 2015 unless effective dates have been specifically mentioned (pending the relevant
amendments to the legislations).
Value Added Tax (VAT)
1.
Reduction of Tax Rate
The present rate of VAT of 12% has been reduced to 11%
2. Expansion of VAT Exemption
2.1 The import of:
(i)
Machinery, equipment and spare parts by Sri Lanka Ports Authority (SLPA) to
be used exclusively within specified ports,
(ii)
Samples in relation to a business worth not more than Rs.50,000/-, subject to
such terms and conditions as prescribed by the Director General of Customs.
2.2 Effective from October 25, 2014, the supply or import of :
(i)
(ii)
Motor vehicles classified under the HS Codes in Chapter 87 ; or
Cigarettes classified under HS Code 2402.20 ;
If liable for Excise (Special Provisions) Duty on the importation, both imported on or
after October 25, 2014 (including supply of such items remains unsold as at that date
which would have been liable for Excise (Special Provisions) Duty had such items
imported on or after October 25, 2014).
(iii)
Liquor classified under HS Code – 2203, 2204, 2205, 2206, 2207 and 2208,
imported on or after October 25, 2014 liable to Customs Duty and Cess
(including supply of such items remains unsold as at that date which would have
been liable for Customs Duty and Cess had such items imported on or after
October 25, 2014).
(iv)
Liquor or cigarettes falling under the same HS Code Numbers given in items ( ii
) and (iii ) above, manufactured and subject to Excise (Ordinance) Duty or
Excise (Special Provisions) Duty as the case may be (including sale of stocks as
at October 25, 2014);
(Please refer:
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Order under section 3 of Excise (Special Provisions) Act No. 13 of 1989
published in the Gazette No 1885/42 dated October 24, 2014;
Order under section 3 C of Excise (Special Provisions) Act No. 13 of 1989
published in the Gazette No 1885/43 dated October 24, 2014;
Excise Notification No 972 of the Excise Ordinance published in the Gazette
No 1885/44 dated October 24, 2014 ;
Order under section 14 of the Sri Lanka Export Development Act No 40 of
1979 published in the Gazette No 1885/45 dated October 24, 2014;
Order under section 14 of the Sri Lanka Export Development Act No 40 of
1979 published in the Gazette No 1885/46 dated October 24, 2014;
Revenue Protection Order No 02/2014 under the Revenue Protection Act No 19
of 1962 published in the Gazette No 1885/48 dated October 24 , 2014 ;
for applicable rates of Customs Duty, Cess, Excise ( Special Provisions) Duty and
Excise Ordinance Duty applicable consequence to the exemption for VAT) .
3. Provision of leasing facilities:
3.1 The lease Agreements entered on or after 25.10.2014
Provision of leasing facilities under any finance lease agreement or operating
leasing agreement provided by any specified institution or any other person
referred to in Chapter IIIA of the VAT Act, if such agreement is entered into
on or after October 25, 2014 is exempt from (normal) VAT but subject to
VAT on Financial Services irrespective of the date of import of the asset which
is supplied under such leasing facility.
3.2 Following leases and disposal of assets leased shall continue to be liable to
(normal) VAT on which the lease Agreements entered on or before
24.10.2014
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The lease agreements entered into prior to October 25, 2014 ; or
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The consideration paid for the transfer of any good supplied under
any such lease agreement to the lessee at the termination of the lease
agreement (including the pre-mature termination) notwithstanding
the fact that the total consideration of the termination exceeds ten
per centum of the total consideration of the lease agreement ; or
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Re- schedule of any lease ; or
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Disposal value of asset repossessed by the lessor to recover rentals in
default (on which input tax is claimed by the lessor) including the
rental in default recovered in settlement.
4. VAT on wholesale and retail trade
4.1
The present threshold of value of supplies for a consecutive period of three
months of any calendar year of any person or partnership carrying on a
business of wholesale or retail trade for the chargeability to VAT will be
reduced to Rs.100 Mn.
4.2
The value of supply of locally produced fresh milk shall be excluded from the
calculation of deemed liability (restricted to 25% of the total supplies of
goods) applicable on the exempt supplies made by registered person liable
for VAT on wholesale and retail trade.
5. Registration Thresholds
The present threshold of Taxable supplies for the registration for VAT purpose of
Rs.3,000,000 per taxable period or Rs.12,000,000 per annum will be increased to
Rs.3,750,000 per taxable period or Rs.15,000,000 per annum.
Nation Building Tax (NBT)
1
Expansion of Exemption
1.1
The import of :
(i)
Machinery, equipment and spare parts by Sri Lanka Ports Authority (SLPA) to
be used exclusively within specified ports,
(ii)
Samples in relation to a business worth not more than Rs.50, 000/-, subject to
such terms and conditions as prescribed by the Director General of Customs.
1.2. Effective from October 25, 2014 , the supply or import of:
(i)
Motor vehicles classified under the HS Codes in Chapter 87 and subject to
Excise (Special Provisions) Duty on the importation and Cigarettes classified
under HS Code 2402.20, both imported on or after October 25, 2014 ;
(ii)
Liquor classified under HS Code – 2203, 2204, 2205, 2206, 2207 and 2208,
imported on or after October 25, 2014;
(iii)
Liquor or cigarettes falling under the same HS Code Numbers indicated in
items (ii) above, manufactured and subject to Excise (Ordinance) Duty or
Excise (Special Provisions) Duty as the case may be:
including sale of stocks of such articles as at October 25, 2014, are exempt from
NBT with effect from October 25, 2014 so far as the importer or the
manufacturer sales such articles.
The liability to NBT on the sale of above items (buying and selling business)
other than the sale of cigarettes by subsequent persons will remain unchanged.
2
Registration Thresholds
The present threshold of liable turnover of NBT will be increased from Rs.3, 000,000
to Rs.3, 750,000 per quarter.
3. Provision of lease facilities under any lease agreement entered into on or after
October 25, 2014 subject to VAT on Financial Services, is liable to NBT on financial
services as well irrespective of the date of import of the asset which is the subject of
such leasing facility. The exemption on NBT on any lease agreement entered into
prior to October 25, 2014 continues without any change.
Betting and Gaming Levy
1. Tax rate applicable for gross collection has been increased to 10%.
2. Casino Entrance Levy for Casino entertainment
With effect from January 1, 2015 a Casino Entrance Levy of US$ 100 should be charged per
person who enters Casino entertainment. Arrangement should be made by persons registered
for tax purposes with the Department of Inland Revenue and carrying out the Casino
entertainment, to collect the Levy on behalf of the Government with effect from January 1,
2015.
Default Tax Recovery (Special Provisions) Act No 16 of 2010 providing
refinance facility Scheme to settle post 2010 taxes in default
Arrangements have already been made with certain Government Banks to implement the proposed
Refinance Facility Scheme with immediate effect (pending formal amendments to the relevant Acts).
Tax payers are requested to contact the Senior Commissioner Default Tax Unit or the Deputy
Commissioner General Collection and Legal for further inquiries and necessary arrangements in settling
the due taxes.
For any further clarification, please contact:
VAT Unit
- Tel: 011 - 2338541, 011 - 2134201
NBT Branch
- Tel: 011 - 2135070, 011 - 2338549
Taxpayer Service Unit (TPSU)
- Tel: 011 - 2328702, 011 - 2134053, 011 - 2134171
Secretariat
- Tel: 011 - 2135412, 011 - 2135413, 011 - 2135411
Deputy Commissioner General - Collection and Legal - Tel: 011-2134830
Inland Revenue Web Site
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www.ird.gov.lk
Commissioner General of Inland Revenue
TAXES - FOR A BETTER FUTURE

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