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More taxes on employees
Trade unions are accusing the Government of trying to grab more taxes from employees through a gazette notification which directed that state and private sector employees receiving interest-free loans or loans at concessionary rates would be made liable to pay taxes retrospectively.
In terms of the notification, employees will have to pay taxes on profit sharing schemes, government grants, assistance and subsidies and short-term employment benefits.The gazette notification was issued in March this year, but it is now being implemented with retrospective effect from April 1, 2012.
“A three year period will be provided to deduct the arrears,” a senior Tax Commissioner said.
“There are some company directors who obtain interest free loans and do not pay taxes. But under the new regulations it will be considered as an income and will be taxed,” the officer said. The Commissioner said the new taxes were part of the changes in the accounting system to bring Sri Lanka in line with international standards.
But, trade unions leaders yesterday charged that the Government, on the pretext of applying international accounting standards was introducing measures to collect more revenue. “Some of these facilities such as concessionary loans, bonuses and allowances have been obtained after trade union struggles. Now the Government is trying to take away these benefits without increasing salaries,” said Kesara Kottegoda, Joint Convener of the Government, Semi-Government and Private Sector Professionals Solidarity.
He said they would resort to trade union action with the help of other unions if the Government did not withdraw the gazette notification.