AG tells Supreme Court EPF, ETF and other funds will be exempted from Surcharge Tax

Thursday, 3 March 2022 04:37 - - {{hitsCtrl.values.hits}}

The Attorney General yesterday informed the Supreme Court that the Finance Ministry has decided to exclude 13 funds including the Employees' Provident Fund (EPF), the Employees' Trust Fund (ETF), Pension Fund, Pension Trust Fund, Gratuity or Termination Fund from the ambit of proposed Surcharge Tax Bill.

Appearing for the Attorney General, Additional Solicitor General Viveka Siriwardena told the Supreme Court that the Finance Ministry will move several amendments at the Committee Stage in Parliament.

The AG had been informed of this decision by Treasury Secretary S.R. Attygalle via a letter dated 2 March.

Main Opposition Samagi Jana Balawegaya (SJB) as well as several public listed companies filed petitions against the one off 25% surcharge tax on profits made in FY20/21 in the Supreme Court.

The 10 parties individually filed a Special Determination petition seeking a declaration that the bill requires the approval by the people at a Referendum in addition to the 2/3 approval of the Parliament.

Following the AG’s notification, Farman Cassim PC appearing for the SJB informed the Supreme Court that he would not be making submissions. Cassim said the petitioner was only espousing the cause of the working class and the Pension Funds rightfully belonging to the general public.

Supreme Court three-judge-bench comprised Justice Buwaneka Aluwihare, Justice A.H.M.D. Nawaz and Justice Arjuna Obeysekera.

Farman Cassim PC with Attorneys-at-Law Tharaka Nanayakkara, Budwin Siriwardena, Mithun Imbulamure and Vinura Kularatne, instructed by Sandun Gamage appeared for SJB General Secretary Ranjith Madduma Bandara.

Romesh de Silva PC, Uditha Egalahewa PC appeared for other petitioners.

In his petition, Ranjith Madduma Bandara said in terms of clause 2(1) of the Bill any individual, partnership, or company whose taxable income exceeds Rs. 2000 million for the year of assessment commenced on 1 April 2020 have to pay a rate of 25% on the taxable income of such individual, partnership or company for such year of assessment.

Madduma Bandara maintained that if the Section 2(1) of the Inland Revenue Act No. 24 of 2017 and other incidental provisions of the Bill are read together with Sections 3 and Section 195 of the Inland Revenue Act, a company subject to the Surcharge Tax contemplated under the provisions of the Bill would include, the Employee Provident Fund, the Employee Trust Fund and the Mercantile Service Provident Fund.

The petitioner said those contributions by the Employee and the Employer to the Employees Provident Fund and the Employee Trust Fund are mandated through statute and thus held in trust by the State for and on behalf of the employee contributor.