Add Perpetual Treasuries tax obligations to monies to be recovered: Chandra

Good governance activist Chandra Jayaratne has suggested that the government added the tax obligations of the scandalous primary dealer Perpetual Treasuries to the figure they hoped to recover from the firm.

Recently, President Maithripala Sirisena said that new laws would have to be legislated to expedite legal proceedings on Perpetual Treasuries and recover the losses it incurred on the public through the government securities frauds in 2015 and 2016.

Jayaratne said that Perpetual Treasuries had carried on trading activities in the secondary market after purchasing the bonds, this being carried on as a licensed business, and not as an individual investing his savings in bonds and selling them later.

“Therefore the adjusted tax business profits made by Perpetual Group are liable for income tax at the corporate rate of tax, subject to a due credit for the tax withheld at the point of issue. In addition the Perpetual Treasuries Group is also liable for Financial Value Added Tax,” he said.

Jayaratne, who had consulted leading taxation experts, said since Perpetual Treasuries had failed to declare dividends and arrange profit transfers to group companies Perpetual Treasuries is also liable for deemed dividends tax.

“In addition recoverability of the illegal profits and fines thereon as computed, the Inland Revenue Department must assess them and recover from them, as well as other Primary Dealers, Income Tax on Profits, Financial VAT and Deemed Dividends Tax,” he added.

Perpetual Treasuries had earned over Rs.11 billion in profits through a string of treasury bond auctions via insider trading, Rs.9.2 billion of which was incurred as losses by state-run retirement and education funds, and financial institutions.

The Presidential Commission of Inquiry appointed to investigate the issue had uncovered that the then Central Bank Governor Arjuna Mahendran had leaked sensitive information to his son-in-law and the owner of Perpetual Treasuries, Arjun Aloysius, and that the then Finance Minister Ravi Karunanayake and several officials in public and private sector financial institutions were connected to the fraud.