Finance Bill was passed in Parliament on 23 October 2019 which is yet to be certified by the Hon. Speaker.
1.Luxury Tax on Motor Vehicles
The Finance Act, No. 35 of 2018 provided for the imposition of a Luxury Tax on Motor Vehicles on every specified motor vehicle. The definition of specified motor vehicle has been amended as follows;
a) Where the date of first registration is prior to November 01, 2019:
a specified motor vehicle means any assembled or unassembled;
- diesel motor vehicle with cylinder capacity exceeding 2,300cc,
- petrol motor vehicle with cylinder capacity exceeding 1,800cc,
- an electric vehicle with engine motor power exceeding 200Kw,
but does not include a dual purpose petrol motor vehicle with cylinder capacity less than 2,200cc, a dual purpose motor vehicle, a van, a single cab or a wagon.
b) Where the date of first registration is on or after November 01, 2019:
a specified motor vehicle means:
- any assembled or unassembled motor vehicle
- Excluding vans, single and double cabs, motorcycles, motor tricycles, motor ambulances, motor hearses, lorries, tractors, hand tractors, trailers or any motor vehicle for transport of goods identified by the HS Code System.
c) Consequently, the luxury tax rate will be applicable on all vehicles, unless specifically excluded, on the amount exceeding the relevant Luxury Tax Free Threshold (please refer the table below).
2.Carbon Tax
Currently, there is a Carbon Tax imposed from the registered owner of every vehicle. This carbon tax is to be removed from November 30, 2019. Further, there is no requirement to pay the Carbon tax during this period (i.e. before November 30, 2019) if the motor vehicle is registered for the first time within January 1, 2019 and November 30, 2019.
- Levy on Foreign Commercial Transactions
The purchase of goods or services from a person outside Sri Lanka through a debit/credit/charge/ stored-value card will be subject to this levy of 3.5% on the sum remitted.
Currently Stamp Duty of 2.5% is charged in respect of every credit card transaction entered into with a person outside Sri Lanka. Consequent to the proposals made in the Budget 2019, it is expected that the Levy on Foreign Commercial Transactions will be imposed in place of this Stamp Duty. A Gazette Notification will have to be passed to remove the prevailing Stamp Duty.
Effective date: To be gazetted.
Obligations on financial institutions
- The financial institutions which issue the payment cards and financial acquirers of payment cards are obliged to collect this levy at the time of remittance.
- The financial institutions will have to remit the sum collected to the Commissioner-General on or before the 20th day of the month succeeding the relevant month.
- A Return in respect of a financial year (as may be specified by the Commissioner- General) should be furnished within a period of 6 months from the end of the financial year.
Exemptions
The Minister is empowered to exempt any transaction by order published in the Gazette Notification.
Administration Provisions, Tax Returns, Assessments, Appeals, Payment of Tax, Interest, Recovery, Penalty and Criminal Procedure
Based on the relevant provision of the Inland Revenue Act, No. 24 of 2017.
4.Cellular Tower Levy (CTL)
An annual levy of LKR 200,000/- per tower is currently being imposed on every mobile telephone operator who owns and uses a cellular tower. The Act imposes a surcharge on default of the levy.
Where the levy or part of thereof is in default, a surcharge will be levied, calculated as follows;
- 10% of the amount of the levy in default for one month or part thereof from the due date of payment of the levy; and
- 2% of the amount of levy in default from the due date of payment of the levy and surcharge.
Procedural provisions have also been introduced in relation to the recovery of the tax in default.
