VAT Guide to Value Added Tax - sri lanka inland revenue ...

exchange operation and the fee based on the number of trades through
each Custodian Bank)
iv. Commercial Services - Services such as charges for computer
information, providing “data signal”, and remote data link.
• Fees or Commission on the following are treated as receipts form exempt
supplies.
i. Bankers fees – i.e fees payable by brokering firms (member) in order to
operate as members of the stock exchange – fixed charge
ii. Commission on Brokerage - Share of brokerage commission for
transactions through the stock exchange.
iii. Fees from clients (Listed companies) – charges received form listed
companies based on the number of transactions as a fee for monitoring
of depository operations.
v. Brokers entrance fees – Entrance fees payable by new firms to obtain
a broker license.
(ii). Stock Brokering Firms (i.e Members of the Colombo Stock Exchange)
The services rendered by stock brokering firms in relation to the issue, allotment
or transfer of ownership of any equity security or participatory security can be
considered as exempt financial services. However the services rendered by the
agents of such brokering firms cannot be considered in the same way and
therefore such services are liable to VAT.
(iii)
(iv)
Unit Trusts
A unit of a Unit Trust can be considered as participatory security and the issue,
allotment or transfer of such participatory security can be exempted under
financial services. The exemption may be applicable for the following receipts of
the Unit Trusts as well.
i. Interest income received from bank deposits, commercial paper,
debentures, repurchase agreements and other debt instruments.
ii. Capital gains received by way of sale of equity securities and debt
securities.
Custodian Services
This includes holding of customer funds and settlement of brokers on receiving
instructions from clients for which settlement function a quarterly fee is levied
from the customer. These services are liable to VAT. However, settlement fees
collected by banks for services in connection with carrying out of customers
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