By: Staff Writer
Colombo (LNW): The Inland Revenue Act and the Appropriation Act will be amended in parallel with the domestic debt restructuring program.
Revealing the next steps to be taken following the approval of the government’s domestic debt optimization (DDO) program, State Minister of Finance Ranjith Siyambalapitiya says that Simultaneously an invitation will be extended to all the retirement funds involved in the program for discussions and following those discussions, if they have any alternative ideas, those will be considered,
“All pension funds involved in this will be invited to join this to exchange ideas and share their data. After that, they are given the opportunity to take the necessary decision.”
He said the Inland Revenue Act will have to be amended to prepare the necessary background for DDO program
He noted “A Appropriation Act has to be amended along with these works. After that, after informing their decision, we can implement this program.”
The Minister said the 9 percent interest given for the retirement funds will be protected and if necessary provisions for the interest will be obtained from the Treasury and that the President has taken the responsibility for the protection of pensioners’ funds.
Cabinet green light has been granted to draft a bill amending the Inland Revenue Act to revise income tax rates levied on the interest income earned from Treasury bonds by superannuation funds, if the fund holders disagree with the domestic debt optimisation (DDO) process.
President Ranil Wickremesinghe, in his capacity as the Minister of Finance, Economic Stabilization, and National Policies, sought Cabinet approval to publish the bill in the Government Gazette and present it in parliament.
Under the DDO, the maturity of Treasury bonds held by superannuation funds, including Employees’ Provident Fund and Employees’ Trust Fund, has been extended from 2027 to 2038 with a step-down coupon structure of 12 percent until 2025 and 9 percent until maturity.
Out of the Rs.8.7 trillion outstanding Treasury bonds, 36.5 percent is held by the superannuation funds.
If these fund holders reject the DDO, the government proposes to increase the tax rate on the interest income of these funds from the current 14 percent concessionary rate to 30 percent standard rate.
The Department of Government Information said the bill prepared in this regard by the Legal Draftsman has received Attorney General’s clearance.
The Cabinet of Ministers on June 28 approved a proposal to introduce amendments to the Inland Revenue Act No. 24 of 2017 for revising the income tax rate levied on the income earned by investing in Treasury bonds by superannuation funds to facilitate the local debt optimisation process.
