Sri Lanka's Court of Appeal has invalidated the Inland Revenue Department's decision to classify national cricketers as employees and impose Advance Personal Income Tax, ruling in favor of players who challenged the reclassification.
The Court of Appeal delivered a writ order on Monday quashing the Commissioner General of Inland Revenue's decision to treat members of Sri Lanka's national cricket teams as employees subject to Advance Personal Income Tax (APIT). The ruling came following petitions filed by national players including Test captain Dhananjaya de Silva, then-ODI captain Charith Asalanka, and members of the women's cricket team.
The central dispute involved the IRD's reclassification of national cricketers from their longstanding status as Independent Service Providers to employees, a change the players' legal representatives argued was arbitrary and unjustified. Counsel for the cricketers emphasized that players had been treated as Independent Service Providers for over 15 years before the IRD altered this classification to impose APIT deductions from their payments with Sri Lanka Cricket.
The IRD had maintained that the new classification was valid based on cricketers' contractual relationships with Sri Lanka Cricket and argued that recent amendments to the Inland Revenue Act did not apply to the petitioners. However, the Court of Appeal observed that recent legislative amendments had created a specific category for "sports persons" as Independent Service Providers who are not liable for APIT, effectively supporting the players' position.
The Court of Appeal President Justice Rohantha Abeysuriya and Justice K. Priyantha Fernando presided over the case. Notably, the judges clarified that the writ order was issued without prejudice to any future decisions the Commissioner General of Inland Revenue may make regarding the matter, leaving open the possibility of further proceedings.