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IRD amasses Rs. 58 b in Surcharge Tax 

30 Apr 2022

  • First instalment brings 16% more revenue than initial target
  • Ceylon Tobacco the highest tax payer
  • Tax aims at collecting Rs. 100 b
  • Second and last instalment due on 20 July
By Imesh Ranasinghe  Speaking to The Sunday Morning Business, IRD Commissioner General H.M.W.C. Bandara​ ​​​said that the IRD had collected around Rs. 58 billion during the first round, achieving 16% more than the target of Rs. 50 billion set for the first round of collection. The Surcharge Tax, which was introduced by the 2022 Budget as a one-off tax, was passed in Parliament earlier this month and it is expected to generate Rs. 100 billion in tax revenue at a 25% tax rate from individuals, partnerships, or companies which had an annual taxable income of Rs. 2,000 million or more for the financial year 2020/21. During the Budget speech, former Finance Minister Basil Rajapaksa said that 62 companies in the country had been already identified as eligible for the tax. Under Clause 2(1)(a) of the Act, each company of a group of companies where the aggregate taxable income of the group exceeds Rs. 2 billion for FY 2020/21 should also pay tax based on the proportion of taxable income earned by the companies in the group.  The companies need to pay the tax in two equal instalments on or before 20 April 2022 and 20 July 2022.  Further, the Attorney General informed the Supreme Court that the Surcharge Tax does not include the EPF, ETF, and 11 other funds as petitions were filed against the Bill claiming that the tax would target 13 State funds. According to the annual report of Ceylon Tobacco Company (PLC), which is the highest tax revenue contributor to the State, it has paid Rs. 3,153 million in the first instalment from the total Surcharge Tax amounting to Rs. 6,306 million. People’s Bank said that paying the Surcharge Tax would result in an increase in tax liability and a reduction in equity by approximately Rs. 5.755 billion, while Dialog Axiata PLC said that Surcharge Tax payable was in the range of Rs. 3 billion to Rs. 4 billion.  


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