Surcharge tax doesn’t include 13 retirement funds including EPF, ETF: AG tells court
March 2, 2022 12:12 pm
The Attorney General today (March 02) informed the Supreme Court that one-time surcharge tax of 25% to be imposed on individuals or companies earning an annual taxable income of Rs. 2,000 million, does not include 13 retirement funds including Employees’ Provident Fund (EPF) and the Employees’ Trust Fund (ETF).
The petitions filed against the Surcharge Tax Bill presented by the government to the parliament were taken up before Supreme Court’s three-judge bench comprising Justices Buwaneka Aluvihare, A.H.M.D. Nawaz and Arjuna Obeysekara.
During the proceedings, Deputy Solicitor General Viveka Siriwardhane, who appeared on behalf of the Attorney General, presented a letter directed to the Attorney General by the Secretary to the Finance Ministry, containing the proposed amendments to the Surcharge Tax Bill.
She said this letter also contains several amendments proposed to be made to the relevant Bill during the committee stage debate in the parliament.
Further, the deputy solicitor general clarified that the proposed tax has excluded 13 retirement funds including the Employees Provident Fund (EPF) and the Employees’ Trust Fund (ETF).
It was mooted 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 EPF and ETF would also be subjected to this 25% surcharge tax as any fund that exceeds Rs. 2 billion taxable income.
Later, 10 parties including main opposition Samagi Jana Balawegaya filed petitions with the Supreme Court challenging the said Bill.
