Cabinet divided over surcharge on EPF / ETF

It is reported that a number of Cabinet Ministers are to suggest against the imposition of a 25% tax surcharge on the profits of pension funds including the Employees Provident Fund (EPF) and Employees Trust Fund (ETF).

Last week in Parliament, the Minister of Labour – Nimal Siripala de Silva openly expressed that the ministry is vehemently opposed to taxing the EPF.

It is also said that other ministers including Udaya Gammanpila and Vasudeva Nanayakkara are of the same opinion.

The EPF and ETF funds currently amount to around 3,000 billion rupees (about 3 Trillion rupees) and the government already levies a tax of 14% per annum on those funds.

After the imposition of the one-time tax surcharge, the tax rate imposed on these funds will become 39% this year.

According to the Central Bank of Sri Lanka, there are around 121 pension schemes being operated through commercial banks and state approved financial institutions.

By January 2021, the total assets of such funds (with a membership over 1,86,491 persons), were at Rs. 364 billion.

The tax surcharge is to be imposed on these funds as well.

However, the Ministry of Finance states that this is a one-time tax and will not cause any financial loss to the beneficiaries of the funds.

The Central Bank says the tax will be levied on profits made after all benefits are paid so that fund membership will not be affected.

Related News :
Labour ministry opposes taxing EPF – minister (Video)

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