Corporate tax

1. CORPORATE TAX AT A GLANCE
YEAR OF ASSESSMENT 2014/2015
INCOME TAX STANDARD RATES Rates
All companies (other than those taxed at special rates)
28%
Deemed dividend tax
15%
Income tax on dividends including scrip dividends and dividend in specie
10%
Remittance tax on non-resident companies
10%
Dividend distributed out of dividend received from outside Sri Lanka (if distributed within one month of receipt)
Exempt*
SPECIAL RATES
Manufacturers and service providers with turnover less than Rs. 500mn Per quarter (non-group companies)
12%*
Supply of services to exporters of goods or services or to foreign principal for payment in foreign currency
12%*
Listed company with >20% share issue to the public (if corporate tax rate- 28% or more)
½ of the rate
Qualified export profits and income of a company
12%
Corporate entities for provision of international services by professionals
1/2 of the rate for 5 yrs*
Provision of skill development in shipping industry to trainees by ship operator or agent of foreign ship
Deduction of 10% of Tax payable*
Income on provision of loans by banks for construction of residential apartments by professionals
½ of applicable rate*
Relocating international headquarters in Sri Lanka
Exempt *
Royalty on Intellectual property earned in foreign currency
Exempt*
ECONOMIC SERVICE CHARGE
On liable turnover (if there was no taxable income in the preceding year)
0.25%
If there was a taxable income in the preceding year
Exempt
Time bar period
18 months*
CAPITAL ALLOWANCES Rates on Cost
Buildings (purchase of building)
6.67%
Buildings constructed for commercial use
10%
Plant Machinery, Equipment and ships (except export industry)
33.33%
Computer Hardware, Software & Calculating equipment
25%
Commercial vehicles & furniture
20%
Purchase of locally produced software
100%
Intangible Assets excluding goodwill
10%
Bridges, railway tracks, reservoir, electricity /water distribution & toll roads
6.67%
High tech Plant Machinery or equipment for energy efficiency
50%
Plant, machinery or equipment for upgrading or new technology
50%
Plant, machinery or equipment for energy efficiency (conditions specified)
100%
Plant, machinery and equipment for Broker Back Office system
100%
Plant machinery and equipment for export industry
50%
DEDUCTIBILITY OF EXPENSES
Cost of acquiring intellectual property which earns income in foreign currency (Royalty)
100%*
Cost of acquisition/merger of a finance company by the main finance company
100% in 3years*
Special expenses for incorporation of Headquarters in Sri Lanka
100%*
VALUE ADDED TAX
On wholesale and retail businesses with turnover > Rs. 250 Mn per quarter.
12%*
Supply of imported goods subject to special commodity levy turnover>Rs.250 Mn per quarter
12%*
NATIONS BUILDING TAX
Supply of imported goods subject to special commodity levy
2%*
Supply of Banking and Financial Services
2%*
TELECOMMUNICATION LEVY
Telecommunication Levy
25%*
* changes in 2014/2015