Circular to be issued preventing Government institutions from paying employees’ PAYE taxes

Sri Lanka Government prohibits state and semi-government institutions from paying the ‘Pay As You Earn’ (PAYE) tax of employees through the respective institutions’ funds.

State Minister of Finance Ranjith Siyambalapitiya revealed that the relevant circular will be issued within this week.

The PAYE tax has been imposed as a tax to be paid to the government by individuals who earn an income beyond a certain limit.

Some state institutions and semi-government institutions have previously been paying the relevant tax, Siyambalapitiya stressed.

But such irregularities could not be allowed in the current economic situation, the State Minister said.

“If anyone earns more than a certain limit, they are subject to the PAYE tax even if it is the government, semi-government or the private sector”, he said.

“But previously, especially in the semi-government sector and in corporations, we have experienced cases where the PAYE tax is paid by the relevant intuition itself under certain service agreements”.

“This is not the time for such inefficiencies”, he added.