Sri Lanka EPF contributions to be taxed at the same way
ECONOMYNEXT – Salaries of workers paying Employees Provident Fund will continue to be taxed with no change, Deputy State Minister Eran Wickramaratne said.
"The status quo will remain," he told reporters.
Ex-President Mahinda Rajapaksa had warned that under a new Inland Revenue Act, the taxable gross salary of a person will be raised by 12 percent to include the employers’ contribution to the Employees Provident Fund.
If there is no change only the 8 percent deduction will be taxed.
The new administration is also taking away a 35,000 to 50,000 rupee a month transport or car allowance that was made tax free by Rajapaksa.
The current administration is consolidating a 60,000 tax free allowance with 50,000 car allowance and will charge Pay As you Earn (PAYE) tax from 100,000 rupees a month upwards.
When Rajapaksa was finance minister the maximum personal tax rate was made 16 percent in a bid to improve compliance.
However now slabs with rates as high as 24 percent will be charged from higher earning individuals.
Analysts say it is better to pay taxes to finance state spending if money printing and inflation can be avoided.
However in 2015 and 2016, the administration also printed money and people were hit with a double whammy of currency collapse from 130 to 152 rupees a dollar, which has pushed up inflation as well.
Currency depreciation and inflation which denies a living wage to workers will drive then to seek overseas employment and also increase public discontent. (Colombo/Aug25/2017)