Govt. gazettes Bill to impose 25% retrospective one-off tax

Tuesday, 8 February 2022 01:21 - - {{hitsCtrl.values.hits}}

Companies with over Rs. 2 b taxable income for FY21 liable
Surcharge Tax Bill published in Gazette after Cabinet nod
Bill drafted in keeping with 2022 Budget proposal
Tax to be paid by liable individual/entities in two instalments by March and June this year
Tax to be calculated in accordance with the Inland Revenue Act of 2017

By Chandani Kirinde

The Surcharge Tax Bill which seeks to impose a retrospective one-time surcharge tax of 25% on persons and companies with a taxable income over Rs. 2 billion for the year 2020/2021 has been published in the Gazette.

The Bill, proposed by Finance Minister Basil Rajapaksa received Cabinet approval last week.

The Bill has been drafted in keeping with the proposal in the 2022 Budget to impose a one-off 25% surcharge tax on individuals or companies earning taxable income more than Rs. 2 billion for the assessment year 2020/2021.

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 2022 to the Commissioner General of Inland Revenue.

The tax Commissioner-General will be remitted to the Consolidated Fund within fifteen 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 be 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. The tax will be calculated in accordance with the provisions of the Inland Revenue Act No. 24 of 2017.