Volume VI

NATION BUILDING TAX act

Arrangement of Sections

1. Short title.

2. Person to whom this Act applies.

3. Imposition of a Nation Building Tax.

4. Payment of the Tax.

5. Collection of the Tax by the Director-General of Customs.

6. Tax Credits.

6A. Turnover from Islamic Financial Transactions to be chargeable to tax.

6B. Use of electronic communications or electronic records.

7. Notice of chargeability.

8. Certain provisions of the Inland Revenue Act to apply.

9. Sinhala text to prevail in case of inconsistency.

10. Interpretation.

SCHEDULES

9 of 2009,

32 of 2009,

10 of 2011,

4 of 2012,

9 of 2012,

11 of 2013,

10 of 2014,

12 of 2015,

22 of 2016,

13 of 2017,

20 of 2018,

20 of 2019,

3 of 2020.

AN ACT to provide for the imposition and collection of a tax to be called the Nation Building Tax on the liable turnover of every person to whom this act applies; and to provide for matters connected therewith or incidental thereto.

[Date of Commencement: 11th March, 2009]

[Note: S 6B inserted by Act 12 of 2015 not incorporated as not commenced.]

1. Short title.

This Act may be cited as the Nation Building Tax Act.

2. Person to whom this Act applies.

(1) The provisions of this Act shall apply to every person who—

(a) imports of any article, other than any article comprised in the personal baggage of the passenger, into Sri Lanka, [“baggage” shall have the same meaning as in section  107A of the Customs Ordinance]; or

(b) carries on the business of manufacture of any article; or

(c) carries on the business of providing a service of any description; or

[S 2(c) am by s 2 of Act 10 of 2011.]

(d) carries on the business of wholesale or retail sale of any article other than such sale by the manufacturer of that article being a manufacturer to whom the provisions of paragraph (b) applies.

[S 2(d) ins by s 2 of Act 10 of 2011.]

(2) Every person referred to in subsection (1) shall, hereafter in this Act, be referred to as “person to whom this Act applies”.

3. Imposition of a Nation Building Tax.

(1) A tax to be called the “Nation Building Tax” (hereinafter referred to as “the Tax”) shall, subject to the provisions of this Act, be charged prior to December 1, 2019, from every person to whom this Act applies, calculated at the appropriate rate specified in the Second Schedule to this Act, in the following manner—

[S 3(1) am by s 3 of Act 10 of 2011; s 2 of Act 3 of 2020.]

(i) in the case of a person referred to in paragraph (a) of subsection (1) of section 2, who imports any article into Sri Lanka on or after January 1, 2009 the tax shall be chargeable in respect of the liable turnover of such person arising from the importation into Sri Lanka of such article; and

(ii) in the case of a person referred to in paragraph (b) or (c) or (d) of subsection (1) of section 2, for every quarter commencing on or after January 1, 2009 (hereinafter referred to as “relevant quarter”, the tax shall be chargeable in respect of the liable turnover of such person for such relevant quarter.

[S 3(1)(ii) am by s 3 of Act 10 of 2011.]

(2) In this section “liable turnover”—

(i) with reference to any person referred to in paragraph (a) of subsection (1) of section 2 arising from the importation of any article, means the value of that article ascertained for the purpose of Value Added Tax under section 6 of the Value Added Tax Act, No. 14 of 2002, but does not include the value of any excepted article referred to in the First Schedule to this Act;

[S 3(2)(i) am by s 3 of Act 10 of 2011.]

(ii) with reference to any person and to any relevant quarter referred to in paragraph (b) of subsection (1) of section 2, means the sum receivable whether received or not from the sale in Sri Lanka, in that quarter, of any article manufactured by such person, other than any excepted article referred to in the First Schedule to this Act;

[S 3(2)(ii) am by s 3 of Act 10 of 2011.]

(iii) with reference to any person referred to in paragraph (c) of subsection (1) of section 2 and to any relevant quarter means the sum receivable, whether received or not, from the provision in Sri Lanka of any service referred to in that paragraph other than any excepted service referred to in the First Schedule to this Act:

[S 3(2)(iii) am by s 3 of Act 10 of 2011.]

Provided that, the liable turnover from the supply of any financial service in Sri Lanka, by any person carrying on the business of providing financial services shall, notwithstanding anything to the contrary in any other provisions of this Act, be—

(a) for any quarter ending on or before September 30, 2014 and the period commencing on October 1, 2014 and ending on October 24, 2014, the value addition attributable to such financial service, calculated for the purposes of applying the attributable method referred to in subsection (4) read with subsection (5) of section 25C of the Value Added Tax Act, No. 14 of 2002, for the payment of Value Added Tax on the supply of financial services; and

(b) for the period commencing from October 25, 2014 and ending on December 31, 2014 and for any quarter commencing on or after January 1, 2015, the value of supply referred to in subsection (2) of section 25A of the Value Added Tax Act, No. 14 of 2002:

[S 3(2) proviso subs by s 2(1)(a) of Act 12 of 2015.]

Provided however, the value addition attributable to such financial services shall be computed for the payment of tax on the business of financial services for the purpose of this Act by applying the attributable method referred to in subsection (4) read with subsection (5) of section 25C of the Value Added Tax Act, No. 14 of 2002.

[S 3(2) proviso ins by s 2(1)(a) of Act 12 of 2015.]

Provided further, that in calculating the value addition attributable to such financial service, where the amount of profits for each relevant quarter cannot be accurately ascertained, such amount may be estimated on the basis of available information. The estimated amount shall be adjusted to reflect the actual amount with the audited statement of accounts on yearly basis and such adjustment shall be submitted within six months after the closing date of the relevant accounting period.

[S 3(2)(iii) proviso ins by s 2(1) of Act 10 of 2014.]

(iiiA) For the purposes of paragraph (iii), with reference to any person referred to in paragraph (c) of subsection (1) of section 2 arising from the business of real estate and improvement thereon, means the value of that service ascertained for the purpose of Value Added Tax Act under subsection (7) of section 5 of the Value Added Tax Act, No. 14 of 2002, but does not include the value of any excepted service referred to in PART II of the First Schedule.

[S 3(2)(iiiA) ins by s 2(1)(b) of Act 12 of 2015.]

(iv) with reference to any person referred to in paragraph (d) of subsection (1) of section 2 and to any relevant quarter means the sum receivable whether received or not from the sale in that quarter, of any article, other than—

(1) pharmaceuticals;

(2) —

(a) sugar, dhal, potatoes, onions, dried fish, milk powder or chilies under the provisions of the Special Commodity Levy Act, No. 48 of 2007, where such article is sold on or before December 31, 2013, by the importer of such article; or

(b) any article which is subject to the Special Commodity Levy under the provisions of the Special Commodity Levy Act, No. 48 of 2007, where such article is sold on or after January 1, 2014, by the importer of such article without any processing except for adaption for sale;

[S 3(2)(iv)(2) subs by s 2(2)(i) of Act 10 of 2014.]

(3) gems or jewellery, if sold on the payment of foreign currency by any person authorised by the Central Bank of Sri Lanka to accept payment in foreign currency; and

[S 3(2)(iv) ins by s 3 of Act 10 of 2011; S 3(3) am by s 2(2) of Act 9 of 2012.]

(4) any printed book (with effect from July 1, 2011);

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