Salient features of Surcharge Tax
Liability
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(a) any individual, partnership or company, whose taxable income
calculated in accordance with the provisions of the Inland Revenue
Act, No. 24 of 2017, exceeds Rs. 2,000 million, for the Y/A 2020/21,
at the rate of 25% on the taxable income of such individual,
partnership or company, for such year of assessment:
Provided however, the income of a partner derived from a partnership
shall not be taken into account when calculating the taxable income
of such partner as an individual, if the tax has been paid by the
partnership on such taxable income;
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(b) each company of a group of companies, of which the aggregate of
the taxable income of all subsidiaries and the holding company in
that group of companies, calculated in accordance with the
provisions of the Inland Revenue Act, No. 24 of 2017, exceeds Rs.
2,000 million, for the Y/A 2020/21, at the rate of 25%, on the
taxable income of each such company after deducting the gains and
profits from dividends received from a subsidiary which is part of
such taxable income of each such company, for such year of
assessment, notwithstanding that the taxable income of any one of
such companies does not exceed Rs. 2,000 million.
In calculating the aggregate of the taxable income under paragraph
(b), any subsidiary or any holding company of such group of
companies which has a nil amount due to losses or unrelieved losses,
shall not be taken into account.
If have different period for tax
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Where the Commissioner-General has approved an alternative period of
twelve months under the provisions of the Inland Revenue Act, No. 24
of 2017, for the purpose of maintaining accounts of any company
liable to pay the tax under this Act, such approved period shall be
deemed to be the year of assessment commenced on April 1, 2020, for
the purposes of this Act.
Payment
In two equal installments, to the Commissioner - General.
- 1st installment - on or before, 31.03.2022
- 2nd installment - on or before 30.06.2022
Accounting and deductibity for tax purpose
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Surcharge tax shall be deemed to be an expenditure in the financial
statement relating to the year of assessment 2020/21
-
No deduction shall be granted in calculating the taxable income
under the Inland Revenue Act, for any year of assessment, for the
payment of the tax
-
No deduction shall be granted in calculating the Value Added Tax on
the supply of financial services for the payment of the tax
Important Definitions
- “taxable income”
(a) in relation to a company which has entered into an agreement
with the Board of Investment of Sri Lanka under section 17 of the
Board of Investment of Sri Lanka Law, No. 4 of 1978 and has become
liable to income tax determined in accordance with such agreement,
after the expiration of its period of tax exemption set out in such
agreement means the profit before income tax and the tax levied
under this Act of such company as per the audited financial
statement;
(b) in relation to an individual, a partnership, a company and the
subsidiaries and the holding company of a group of companies other
than the companies referred to in paragraph (a), shall have the same
meaning assigned to such expression under section 3 of the Inland
Revenue Act, No. 24 of 2017.
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“group of companies” means a holding company and its subsidiaries;
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“holding company” means a company which owns more than fifty per
centum of the shares with voting rights of another company, directly
or indirectly, other than a holding company incorporated outside Sri
Lanka and not registered under Chapter XVIII of the Companies Act,
No.7 of 2007
-
“subsidiary” means a company in which more than fifty per centum of
its shares with voting rights are owned by another company, directly
or indirectly other than a subsidiary incorporated outside Sri Lanka
and not registered under Chapter XVIII of the Companies Act, No.7 of
2007 of a holding company incorporated outside Sri Lanka and not
registered under Chapter XVIII of the Companies Act;
Submission of return
- On or prior to March 31, 2022
Administrative provisions
-
Provisions of Inland Revenue Act, No.24 of 2017 shall, mutatis
mutandis, be applicable to the administration, record keeping and
information collection, tax returns, assessments, objections and
appeals, liability for and payment of tax, interest, recovery of
tax, penalties and criminal proceedings
