SC gives go ahead to Surcharge Tax Bill

Wednesday, 23 March 2022 00:00 - - {{hitsCtrl.values.hits}}

SC determines provisions of Bill consistent with Constitution
Says can be passed with simple majority in House
Bill seeks to impose 25% one-off retrospective tax on persons/companies with taxable income over Rs. 2 b for 2020/2021
Bill to be amended during debate to exclude 13 provident and pensions funds including EPF, ETF from tax
11 petitions filed challenging Bill in SC

By Chandani Kirinde

The Supreme Court has determined that the Surcharge Tax Bill which seeks to impose a retrospective one-time 25% surcharge tax on persons and companies with a taxable income over Rs. 2 billion for the year 2020/2021 is consistent with the Constitution and can be passed by simple majority in Parliament.

Deputy Speaker Ranjith Siyambalapitiya announced the SC determination to the House yesterday.

“On an overall consideration of the provisions of the Bill, we arrive at the conclusion that neither the Bill nor any of its provisions is inconsistent with Article 12 or 13 or any provisions of the Constitution. In the circumstances, this Bill can be validly passed by a simple majority of the Legislature,” the three-member Bench of the SC said.

The Bench comprised SC justices Buwaneka Aluwihare PC, A.H.M.D. Nawaz and Arjuna Obeyesekere.

11 petitions were filed in the SC challenging the constitutionality of the Bill.

At the hearing, the Additional Solicitor General who represented the Attorney General informed the court that the Finance Ministry will move amendments during the committee stage debate on the Bill so as to exclude pensions and provident funds from the payment of the supercharge tax.

This includes 13 pension and provident funds in banks and other State institutions as well as the Employees Provident Fund and the Employees Trust Fund.

Under the provisions of the Bill, 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 exceeds Rs. 2 billion for the year of assessment commenced on 1 April 2020 will be charged the Surcharge Tax.

The tax will be imposed on the income of each such company after deducting the gains and profits from dividends received from a subsidiary which is part of such taxable income of each such company, for such year of assessment, notwithstanding that the taxable income of any one of such companies does not exceed Rs. 2 billion.

If any individual, partnership, company and the subsidiaries and the holding company of every group of companies liable to pay the tax under this Act are required to pay the tax in two equal instalments on or before 31 March and 20 June to the Commissioner General of Inland Revenue.

The tax Commissioner-General will be remitted to the Consolidated Fund within 15 days from the date of collection.

Any individual of liable to pay the tax under this Act, fails to do so, they will be considered as defaulters and it shall we lawful for an assessment to be made in the name of the partnership and the amounts thereon shall be recoverable out of the assets of the partnership, or from any partner, or from any agent of the partnership.