Surcharge tax ‘will be applicable on income crossing Rs 2 billion for 2020/21’

COLOMBO: The recently announced surcharge tax was likened to the earlier super gains tax framework by KPMG Principal Tax and Regulatory Suresh Perera.

He noted that the tax in impact was similar in weightage and threshold impact along the tax spectrum.

Perera was speaking at a KPMG organized Budget Analysis 2022 held virtually for the second year consecutively in keeping with the need to minimize physical contact amidst the COVID-19 pandemic.

On the advent of surcharge tax, Perera said, “This is super gains tax in another name.”

He compared the two taxes side by side, which showcased similarities in their impact.

The rate of tax for the newly announced ‘surcharge tax’ is 25%. The tax will be applicable on income crossing Rs 2 billion for the year 20/21 with expected revenue of Rs 100 billion.

Perera noted, however, that though the earlier super gains tax had more details on its implementation the new surcharge tax raised questions on specific tax implications.

Perera said: “When this was introduced as super gains tax it was on Profit Before Tax and there were detailed rules on how a group of companies would be treated but in this proposal, details have not come.”