Financial Statements, Statement of Directors - Hemas Holdings, Ltd

29.2 Applicable Tax RatesAs per the Inland Revenue Act No. 10 of 2006, all resident companies are liable to effective Income Tax of 35% (2009 - 35%), withthe exception of the companies stated below:Hemas Developments (Pvt) Ltd., has obtained BOI approval under Section 17 and it enjoys a tax rate of 2% on Revenue.Pursuant to the agreement dated 28 August 2003, entered into with BOI under Section 17 of the Board of Investment Law,Heladhanavi Ltd., is exempt from Income Tax for a period of 10 years from the year in which the Company commences to makeprofits or any year of assessment not later than 2 years from the date of commencement of commercial operations of theenterprise, whichever is earlier.As per the Section 23 of Inland Revenue Act No.10 of 2006, Hemas Power PLC is classified as a venture capital Company.Accordingly the company enjoyed a 5 year tax holiday period. After expiration of aforesaid tax exemption period in terms ofSection 48 of Inland Revenue (Amendment) Act No 09 of 2008, the Company is liable for tax for the first 3 years at 5%, 10% & 15%respectively. However, expiration of above 3 years concessionary tax period, the company is liable for income tax at the rate of 20%as per the part ‘A’ of the second schedule of the Inland Revenue Act No. 10 of 2006. Accordingly, the Company is liable for incometax at 15% for 2010/2011.Pursuant to the agreement entered with BOI, Okanda Power Grid (Pvt) Ltd ’s profit is exempt from Income Tax for a period of 5 yearsreckoned from the year of assessment as may be determined by the Board, in which the company commences to make profits orany year of assessment not later than 2 years from the date of commencement of commercial operations of the Company, whichever is earlier. After the expiration of aforesaid tax exemption period, the profit of the Company shall be charged at the rate of 10%for a period of 2 years immediately succeeding the last date of the tax exemption period and 20% thereafter.Pursuant to the agreement entered with BOI, Upper Agra Oya Hydro Power (Pvt) Ltd ’s profit is exempt from Income Tax for a periodof 5 years reckoned from the year of assessment as may be determined by the Board, in which the Company commences to makeprofits or any year of assessment not later than 2 years from the date of commencement of commercial operations of theCompany, which ever is earlier. After the expiration of aforesaid tax exemption period, the profit of the Company shall be chargedat the rate of 10% for a period of 2 years immediately succeeding the last date of the tax exemption period and 20% thereafter.Pursuant to the agreement entered with BOI, profit of Giddawa Hydro Power (Pvt) Ltd is exempt from Income Tax for a period of 5years reckoned from the year of assessment as may be determined by the Board, in which the Company commences to makeprofits or any year of assessment not later than 2 years from the date of commencement of commercial operations of theCompany, which ever is earlier. After the expiration of the aforesaid tax exemption period, the profit of the Company shall becharged at the rate of 10% for a period of 2 years immediately succeeding the last date of the tax exemption period and 20%,thereafter.As per the Section 17 of Inland Revenue Act No.10 of 2006, N-able (Pvt) Ltd is exempt from income tax for a period of 3 years. Afterthe expiration of the aforesaid tax exemption period, profits of the Company shall be charged at 5% for the first year, 10% in thesecond year and 15% thereafter.Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, Hemas Hospitals (Pvt) Ltd andHemas Southern Hospitals (Pvt) Ltd are exempt from Income Tax for a period of 5 years, reckoned from the year of assessment, inwhich the companies commences to make profits or any year of assessment not later than 2 years from the date ofcommencement of commercial operations of the companies, whichever is earlier. After the expiration of the aforesaid taxexemption period, profits are charged at 10% for the next 2 years and 20% thereafter.Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, Vishwa BPO (Pvt) Ltd is exemptfrom Income Tax for a period of 3 years reckoned from the year of assessment, in which the Company commences to make profitsor any year of assessment not later than two years from the date of commencement of commercial operations of the Company,whichever is earlier. After the expiration of the aforesaid tax exemption period, profits are charged at 10% for the next 2 years and20% thereafter.Pursuant to the agreement entered into with BOI under Section 17 of the Board of Investment Law, for the business of HemasManufacturing (Pvt) Ltd for manufacturing and / or marketing of soap, personal care items and other fast moving consumer goodsat its relocated factory in Dankotuwa under “300 Enterprises programme”, Inland Revenue Act relating to the imposition, paymentand recovery of income tax shall not apply for a period of 5 years from the year in which the Company commences commercialoperations at the relocated factory. After the expiration of aforesaid tax exemption period, the profits are charged at 10% for aperiod of 2 years and 20% thereafter.Annual Report 2010/11 Hemas Holdings PLC 89