Recent revelations show that the Employees’ Provident Fund (EPF) faces potential risks if the investments made in Treasury Bills and Bonds are not restructured as per the planned strategy. Failing to execute the planned restructuring may lead to a reduction in the benefits provided by the EPF.
A proposal has been presented to restructure the investments made by the EPF in Treasury Bills and Bonds as part of the debt restructuring plan aimed at addressing the ongoing economic crisis. To comprehensively assess the impact of this proposal, a special investigation was jointly conducted by the Ministry of Labour and Foreign Employment, the Ministry of Finance, the Central Bank of Sri Lanka (CBSL), and the EPF.
A thorough study has been conducted to evaluate the potential outcomes and implications of the proposed restructuring, to ensure a well-informed decision that aligns with the country’s economic interests and the welfare of the beneficiaries of the fund.
Efforts have been directed towards exploring opportunities to restructure the investments made by the EPF. It has come to light that without such restructuring, the Fund may face the imposition of a 30 percent tax on income, potentially impacting other financial institutions as well. This scenario poses a significant risk of reducing the benefits provided by the EPF.
The observation has been made that an increase in the tax rate from 14 percent to 30 percent would result in a prolonged period of tax payment.
The recent revelations show that reaching a decision on whether to implement a 30 percent tax rate or to maintain the current 14 percent tax rate while continuing to provide the existing benefits, requires consensus among all parties involved.