THE Section applies to

• A non citizen
• Scientist technician, expert or adviser
• Brought to and employed in Sri Lanka
• By an undertaking under Section 17 of the Board of Investment Law No. 4 of 1978

(Section 8 (1) (d)

The emoluments arising in Sri Lanka and income arising out of Sri Lanka are exempt.

The exemption will however cease

• At the date of cessation of his employment with the undertaking or
• When the exemption of the undertaking ends.

Whicheve is earlier.

Notes:

1. This section is restricted to individuals employed by BOI enterprises where:

*The agreements have been entered into prior to           
   31.12.1994, and
*On an application made prior to 11.11.1993

Section 8 (2)

1. However in the case of BOI undertakings which have opted to pay tax at the reduced rate of 10% by giving up their exemption, non citizens are still entitled to exemption until the original date on which such exemption would have ended.  Section 8 (3)

NON CITIZEN EXPERTS

1. This section applied to:
   *A non citizen expert
   *Employed in Sri Lanka

• Who has entered into an agreement with the Government of Sri Lanka being an agreement which provides for exemption of such emoluments – or,
• Who is emplpyed under any strategic development project gazette by BOI under Section 3 (4) of the Strategic Department Project Act No. 14 of 2008.

The emoluments arising in Sri Lanka and any income not arising in Sri Lanka are exempt from income tax.

An ‘expert’ for the purposes of this section is defined as an individual who has expertise in such field in which sufficient expertise is not available among citizens of Sri Lanka as determined by the Commissioner General.

Section 8 (1) (dd) Section 3 – Amendment Act No. 9 of 2008.

LIABILITY OF A NON RESIDENT COMPANY

The income tax to which a non resident company is liable is made up of the undermentioned:

1. A tax on the taxable income as specified in the Second Schedule to the Act. Concessionary rates of 20%, 15% and 10% are charged on certain companies in certain conditions.
2. Upto the year of assessment 2002/2003 a tax amounting to 1/3 of its remittances abroad or 1/9 of its taxable income, whichever was less was chargeable.

From year of assessment 2003/2004 onwards a sum equal to 10% of the aggregate amount of remittances. 

Section 62 (1) (b)

TAX ON REMITTANCES

1. Where a non resident company makes any remittances, it is liable to a deduction of tax on such remittances.
   From the year of assessment 2003/2004 the deduction is 10% on the aggregate amount of such remittances. 

Section 62 (1) (b)

LIABILITY OF NON RESIDENT PERSONS

Sections 80 – 86/ 93 & 94

LIABILITY

1. A person deemed non resident under Section 79 of the Act is liable to income tax in Sri Lanka on his profits and income arising in or derived from Sri Lanka.  Section 2 (1) (b).
   Profits and Income arising in or derived from Sri Lanka include income from:
   • Services rendered in Sri Lanka
   • Property in Sri Lanka
   • Business transacted in Sri Lanka whether directly or through an agent
   • Interest and royalties arising in or derived from Sri Lanka
     
     
2. The words ‘airsing in’ or ‘derived from’ were meant to include the case of a ‘company, when it makes any profits or gets any income from anything done in Ceylon and in the case of a non resident owner deriving his income from an estate in Ceylon’ as stated in Anglo-Persian Oil Co., Ltd v CIT (1) CTC 92).

PROFITS AND INCOME FROM SERVICES RENDERED IN SRI LANKA

1. The profits of a non resident person from employment by a resident person is liable to income tax in so far as such profits arise from services or past services rendered in Sri Lanka.  Section 85.
   
   
2. An individual who is a non citizen and is employed in Sri Lanka is deemed to be a non resident person for a period of three years from the date of commencement of employment in Sri Lanka.  Section 79 (7).
   
   In the case of employment in a flagship company, he would be non resident for five years from date of commencement of employment.  Section 79(7) Proviso
   
3. Such non resident employee would be liable only on his profits or income derived from Sri Lanka during this period.

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