In a case that could set a major precedent for sports professionals in Sri Lanka, the Attorney General informed the Court of Appeal that contracted national cricketers are to be treated as employees of the Sri Lanka Cricket Board and therefore subject to income tax under the law.
The announcement was made by Deputy Solicitor General Manohara Jayasinghe during court proceedings held on May 22. The legal battle arose after Sri Lanka’s ODI captain Charith Asalanka and Test captain Dhananjaya de Silva filed a petition challenging the Inland Revenue Department’s decision to impose withholding tax on cricketers contracted by Sri Lanka Cricket (SLC).
The petition came up before a bench comprising Acting President of the Court of Appeal Justice Mohamed Lafar Tahir and Justice Priyantha Fernando. The cricketers are seeking a writ of certiorari to quash what they claim is an unlawful reclassification of their professional status.
Representing the petitioners, Attorney-at-Law Nishan Premathirathna argued that national cricketers are not employees of the Sri Lanka Cricket Board. He contended that while the players are under contract, they are not entitled to employee benefits like the Employees’ Provident Fund (EPF) or Employees’ Trust Fund (ETF), and therefore cannot legally be treated as employees for tax purposes.
He further criticized the Inland Revenue Department’s interpretation of the Inland Revenue Amendment Act No. 45 of 2022, calling it “incorrect and without legal merit.” The petitioners, he added, have never been considered staff under the internal framework of SLC and are, at best, independent contractors.
Supporting this claim, President’s Counsel Kuvera de Zoysa appearing on behalf of the Sri Lanka Cricket Board told the court that SLC itself does not consider the players as employees. “They are service providers. They are not on the payroll in the conventional sense and have never been part of SLC’s employee benefits system,” he said.
Interestingly, the President’s Counsel went a step further and revealed that this tax ambiguity has led to a payment freeze. “Since November 2024, Sri Lanka Cricket has been unable to release player payments due to this classification issue,” de Zoysa added, underlining the operational gridlock it has caused.
Despite these arguments, the Deputy Solicitor General maintained that under the Inland Revenue Act, the players who have signed contracts with SLC must be considered employees for tax purposes. “They are contract-bound to Sri Lanka Cricket, and under the current interpretation of the law, this establishes an employer-employee relationship,” he asserted.
The court decided to postpone further hearings to May 28, when the Deputy Solicitor General is expected to present detailed arguments to support the state’s position.
The original petition, filed in March, names the Commissioner General of Inland Revenue, its Deputy Commissioner, the Chairman and Executive Committee members of the SLC, the Auditor General, and others as respondents. The cricketers argue that the new tax imposition has unfairly classified them without a formal inquiry, and violates their rights as professional athletes who have historically operated outside standard government employment categories.
The players also cited precedent. They reminded the court that Sri Lanka’s recognition as a Test-playing nation in 1983, and the contractual frameworks developed after the 1996 World Cup win, never categorized cricketers as employees. Contracts signed post-1996 were service agreements, not employment agreements, they argue.
The petitioners also said they had consulted legal experts, who advised that they should be considered independent service providers rather than employees. They highlighted that, at no point, have they had access to EPF or ETF benefits an essential indicator of employment status under Sri Lankan labor law.
Crucially, they argue that this sudden change by the Inland Revenue Department has placed a significant financial and legal burden on them. Withholding tax applied under an employee classification reduces their income and implies obligations that don’t align with the actual nature of their engagement with Sri Lanka Cricket.
As part of their legal remedy, the cricketers are not only asking the court to annul the decision but also requesting an interim injunction to halt the implementation of the Inland Revenue Department’s ruling until the final verdict is delivered.
This case is being closely watched by legal experts, tax authorities, and sports professionals alike. If the Court of Appeal sides with the players, it could redefine how national-level athletes are treated in Sri Lanka’s legal and tax frameworks. On the other hand, a decision in favor of the state could see players across all sports facing new tax liabilities—and force governing bodies like SLC to revisit how they structure their player contracts.
SOURCE :- BBC SINHALA
The cricketers’ and by extension all SL sportspersons’ argument seems to be that “independent service providers” do not need to pay tax on their income. They should be ashamed of themselves, a privileged group of relatively high earners unwilling to contribute to the common cause of the nation.