The above tax has been passed by Parliament on 07th January, 2009, and had become effective from 01st February, 2009.

The necessary particulars were published in the press on 27th January 2009. This is a tax which could be simply computed and paid by the tax payers.

Further, the returns also could be easily verified by the Department of Inland Revenue.

Whenever a new tax is introduced by the government there is a targeted revenue which has to be achieved. If not the rate has to be increased or more taxes are to be introduced which would be an additional burden to the public at large.

Therefore, I appeal to all to make this important levy a successful operation. They should study the details and co-operate with the government accordingly.

I quote below a few particulars of this Nation Building Tax

(1) Rate 1% on turnover

(2) Importers on value ascertained under section 06 of VAT Act for the purpose of VAT. Manufacturers and service renderers on turnover (excluding VAT and special excise duty)

(3) The minimum turnover should be Rs. 650,000/= per quarter.

(4) Buying & selling exempt.

(5) Hotels, guest houses, restaurants or any other similar business if registered with Sri Lanka Tourist Board also exempt.

(6) There are several exemptions granted (export turnover, supply of water, medical service, etc) These exemptions have to be carefully studied before making tax commitments.

(7) Input claim permitted only for manufacturers.

(8) Monthly payment (1st and 2nd) should be made on or before 20th of the following month. Final payment and the quarterly return submission be made on or before 20th day of the month immediately succeeding the end of that quarter.

There are two clarifications to be made by the Dept of Inland Revenue.

(A) It is stated that an installment for a quarter is an amount not less than one third of the NBT payable for that quarter. This is not correct. It should be stated as previous quarter. Monthly payment should be made on actual information available on or before 20th of the following month. If actual information is not available then payment should not be less than one third of the NBT payable for the previous quarter.

(B) After making the 1st and 2nd monthly installment. You may observe that the quarterly turnover is less than Rs. 650, 000/- In that case, no NBT is payable for that quarter. The 1st and 2nd installments paid could be set off against payment for the next quarter. (The Act is silent in this issue)

I appeal to the business community not to use this levy as an excuse to increase the selling price arbitrarily All exemptions have to be checked to ensure that the correct tax is charged.

This tax is not prescribed and therefore is an allowed expenditure for income tax purpose, like turnover tax paid to the Provincial Council. The Dept of Inland Revenue could change this position with proper amendment in the future. However we could believe that the necessity for such action will not arise.

The public at large could obtain clarifications from the officials of the Department of Inland Revenue who will be pleased to assist them. Tax consultants and Trade Chambers also should extend their support to make this levy operation successful.

Council Member

The National Chamber of Commerce of Sri Lanka