NBT bill limits, grants new exemptions
Parliament has last week passed the Nation Building Tax Bill by limiting and granting new exemptions, according to a note to its clients by tax consultancy EY (Ernst & Young).
It said: Limitation of Exemption
1. Liquor
Liquor had been exempted from NBT under the existing provisions at the point of importation, manufacture or sale (by importer) effective from October 2014.
By this amendment, this exemption has been removed with effect from the effective date of the present amendment. However, the sale of liquor by the importer himself will be liable to NBT effective from April 1, 2018.
2. Electricity
Under the existing provisions, the supply of electricity has been exempted from NBT for the period prior to May 2, 2016 and for the period commencing from July 11, 2016, but prior to April 1, 2017.
By the present amendment, the liable period has been dated back to end on November 1, 2016 (instead of April 1, 2017). As such, the NBT liability on the supply of electricity arises retrospectively from November 1, 2016.
Besides, under the existing provisions, with effect from April 1, 2017, the generation of electricity and the supply of electricity other than the supply of electricity by the Ceylon Electricity Board (CEB) will continue to be exempt. It means that with effect from April 1, 2017 on the supply of electricity, only the CEB is liable to NBT.
Granting new Exemptions
1. Locally Manufactured Coconut Products
Locally manufactured coconut oil had been exempted from NBT (excepted article), at the point of sale by the manufacturer, for three years up to January 1, 2017.
By this amendment, the NBT exemption has been extended to another three years period effective from April 1, 2018, covering not only locally manufactured coconut oil, but also coconut milk, poonac, pairing, coco- nut shells and coconut water, at the point of sale by the manufacturer.
2. Imported non-motorised equipment for water sports Non-motorised equipment and accessories for water sports such as Kayaks, Canoes, Kite surfing and diving have been made exempted from NBT at the point of importation, with effect from the date of present amendment.
3. Non-powered equipment and accessories for aero sports Non-powered equipment and accessories for aero sports such as hang gliding, ballooning, dirigibles, parachuting and para-gliding have been exempted from NBT, at the point of importation, with effect from the date of present amendment. 4. Importation of gem stones for re-export
Exemption has been provided on NBT, at the point of importation, on gem stones imported for re-export after cutting and polishing them.
Service provided by Sri Lanka Deposit Insurance Scheme Any service provided by Sri Lanka Deposit Insurance Scheme ( established by regulation under Monetary Law Act) is made exempt from NBT with effect from April 1, 2018.
6. Construction contractors Under the existing provisions, effective from August 1, 2017, construction sub-contractors have been made exempt from NBT.
By the present amendment, the NBT exemption has been extended to the main contractor as where the relevant contract agreement had been executed prior to August 1, 2017. This would mean that the construction contractors will continue to be liable to NBT for contract agreements signed after August 1, 2017
Non-motorised equipment and accessories for water sports such as Kayaks, Canoes, Kite surfing and diving have been made exempted from NBT at the point of importation, with effect from the date of present amendment.