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Tax on EPF and ETF: Issue to be decided by Legislature

13 Feb 2022

  • EPF and ETF were already being taxed: Attygalle
  • Labour Ministry objects
By Skandha Gunasekara Parliament will have to decide on whether to make changes to a gazette regarding a Surcharge Tax which also sees the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) being taxed, in the face of objections from the Labour Ministry, The Sunday Morning learns. Treasury Secretary S.R. Attygalle, speaking to The Sunday Morning, said the matter was in the hands of the Parliament in terms of making amendments to the legislation as the tax in concern had already been gazetted. “Anybody can object. It is up to Parliament to decide. It is a gazette now, so policymakers have to decide how to proceed from here. It has been gazetted now so things will be implemented accordingly.” He noted that the EPF and the ETF were already being taxed under previous legislation: “The tax is imposed after paying the interest. It is a deductible expenditure. Anyway, there is a tax for EPF. There is an Income Tax levied on the EPF and ETF under the 2017 Act.” Earlier this week Minister of Labour Nimal Siripala de Silva in Parliament objected to the interpretation of the new Surcharge Tax Bill by the Inland Revenue Department, stating that the interpretation was the issue, not the gazette itself. “The Inland Revenue Department gave an interpretation before the Budget, which said that as per the relevant Act, since the returns from EPF and ETF investments are an income, it must be taxed. We have informed the Treasury that this interpretation is wrong and we did so a while back, not recently. We have protested. We have said that it is not liable. Their interpretation is wrong, that is our position,” the Minister said. The new Bill on Surcharge Tax that charges 25% from companies and individuals with an income in excess of Rs. 2 billion was gazetted on Monday (7).     


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