Surcharge Tax Bill tabled in Parliament
February 22, 2022 12:54 pm
Surcharge Tax Bill was presented to the Parliament by Leader of the House, Minister Dinesh Gunawardena today (February 22).
It was proposed in the 2022 Budget to impose a 25% surcharge tax on individuals or companies earning an annual taxable income of Rs. 2,000 million or more.
However, in the case of a partnership, the income of a partner derived from a partnership shall not be taken into account when calculating the taxable income of such partner as an individual, if the tax has been paid by the partnership on such taxable income.
Further, on each company of a group of companies of which the aggregate of the taxable income of all subsidiaries and the holding company in that group of companies having an income over Rs. 2 billion, a 25% surcharge tax will be charged on the taxable income.
It is to be a one-time tax payable by high-value taxpayers in 2022 for their income in the tax year of 2020/21 while the objective of this special tax was to raise the necessary revenue to finance the Government expenditure programs for the year undisturbed.
Concerns were subsequently voiced by experts, opposition politicians as well as members of the government itself that the Employees’ Provident Fund (EPF) and the Employees’ Trust Fund (ETF) would also be subjected to this 25% surcharge tax as any fund that exceeds Rs. 2 billion taxable income would be subjected to this surcharge tax.
However, making a special statement, Minister of Finance Basil Rajapaksa later assured that 11 funds including the EFP and the ETF will not be subjected to this surcharge tax.
He said that at no point did the government expect to include the EPF or ETF into this tax. The lawmaker noted that there are 11 funds including the EPF and ETF and they never intended to include any of them into this tax surcharge. “However, the Inland Revenue Act No. 24 of 2017 of the previous government has identified these 11 funds as income tax paying institutions. Therefore, there was an opinion among the public that this would be a surcharge.”
