July, 22, 2014
Due to President Mahinda Rajapaksa’s decision to remove the taxes imposed by special Gazette notification No. 1857/8, the decision to impose taxes on benefits and perks of employees in state and private sector banks, financial institutions and other profit/loss making institutions including insurance agencies would be done away with, said an official of the Ceylon Bank Employees’ Union (CBEU).
CBEU’s Seylan Bank branch chairman Mahinda Jayaweera told adaderanabiz.lk that through this Gazette notification of 09 April 2014 a decision had been taken to impose a Pay As You Earn or PAYE tax on the financial benefits and perks provided by these institutions to their employees.
“For instance, the particular institution could pay a part of a housing loan obtained from the bank. According to Gazette notification 1857/8, this amount which the institution pays on behalf of the employees also comes under the PAYE tax.
“Accordingly, any benefits or perks like low interest housing loans, air tickets, tours, uniforms etc could be taken into account and brought under the PAYE tax. There would be no limits. Even the tea, meals etc provided to the employees could be considered benefits to the employees and brought under this tax scheme. This is why the trade unions continued to demand that this tax be abolished,” Jayaweera added.
Hence, the government announced yesterday that the taxes would be abolished on interests on housing, distress, vehicle loans, reimbursements of medical expenses, overtime payments etc of employees in banks, financial institutions, insurance institutions and profit/loss state and private institutions.