The Economic Service Charge (ESC) was imposed commencing from 1st April 2004 and has been administered by finance Act No. 11 of 2004 and Act No. 11 of 2005. Since 1st of April 2006, ESC has been administered through the Economic Service Charge Act, No.13 of 2006 and subsequent amendments.
ESC operates as an advance payment of income tax in respect of any person whose liability to income tax exceeds the ESC liability and such person bears no burden of the ESC.
A person whose income tax liability does not exceed the ESC liability, for example in case of a loss making business, ESC has to be paid and no benefit could be obtained as a tax credit.