ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payment made to non-residents for tax year 2021 under Section 152 of Income Tax Ordinance, 2001.
The FBR updated withholding tax card 2020-2021 (up to June 30, 2020) after incorporating amendments made through Finance Act, 2020.
According to the withholding tax rates:
Under Section 152(1), every person shall deduct tax while making payments for royalties and fee for technical payments to non-resident.
The withholding tax rate shall be 15 percent of the gross amount and it shall be increased by 100 percent in case the person is not on the Active Taxpayers List (ATL).
Every person paying royalty or fee for technical services to a non-resident shall withholding tax on payment to non-resident person at the time the royalty or fee for technical services is actually paid
The tax shall be minimum tax as per section 6 read with section 8.
Under section 152(1A), the tax will be deducted from a non-resident person on the execution of;
a) Contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project.
b) Any other contract for construction or services rendered relating there to.
c) Contract for advertisement services rendered by TV Satellite Channels.
The tax rate shall be 7 percent of the gross amount
The tax shall be collected by every person from non-resident person at the time the amount is actually paid.
The tax shall be minimum tax on the income of non-resident person arising from a contract.
Under Section 152(1AA), the tax will be deducted from non-resident on any payment of insurance premium or re-insurance to a non-resident person.
The tax shall be 5 percent of gross amount and 10 percent for persons not appearing in ATL.
The tax shall be collected by every person making the payments to non-resident person at the time the amount is actually paid.
The tax shall be minimum tax.
Under Section 152 (1AAA) tax will be deducted on payments for advertisement services from non-resident person relaying from outside Pakistan.
The tax rate shall be 10 percent of the gross amount.
The tax shall be collected by every person making payment to non-resident at the time the amount is actually paid.
The tax shall be minimum tax.
Under Section 152(1C), the tax shall be deducted on remittance outside Pakistan, of fee for off-shore digital services, chargeable to tax u/s 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan.
The tax rate shall be 5 percent of the gross amount.
The tax shall be collected by banking company or financial institution from non- resident at the time the amount is actually paid.
Under Section 152(2) tax deduction on payment to non-resident, not otherwise specified.
The tax rate shall be 20 percent of the gross amount and the rate shall be 40 percent for persons not appearing on the ATL.
The tax shall be collected by every person making payments to non-resident person at the time the amount is actually paid.
The withholding tax shall be adjustable.
Under Section 152(2), as per clause 5AA of Part-II of the Second Schedule, the rate of tax to be deducted under sub-section (2) of section 152, in respect of payments to an individual, on account of profit on debt earned from a debt instrument, whether conventional or shariah compliant, issue by the Federal Government under the Public Debt Act, 1944 and purchased exclusively through a bank account maintained abroad, a non-resident Rupee account repatriable (NRAR) or a foreign currency account maintained with a banking company in Pakistan.
The tax rate shall be 10 percent of the gross amount and the tax rate shall be increased by 100 percent in case person is not on the ATL.
The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment.
The tax shall be final.
Under Section 152(2A), every prescribed person making payment to a Permanent Establishment of Non- Resident.
For:
(a) Sale of goods
(i) In case of a company the tax rate shall be 4 percent of the gross amount.
(ii) Other than company cases the tax rate shall be 4.5 percent of the gross amount.
(b) (i) In the cases of transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd., inspection and certification, testing & training services.
The tax rate shall be 3 percent and the tax rate shall be increased by 100 percent in case persons are not on the ATL.
(ii) in case of a company the tax rate shall be 8 percent and it shall be 16 percent for persons not on the ATL.
(iii) Other than company cases the tax rate shall be 10 percent and the rate shall be increased by 100 percent in case persons are not on the ATL.
(c) Execution of a contract other than a contract for sale of goods or providing/ rendering of services.
(i) In case of sports persons the tax rate shall be 10 percent and it shall be 20 percent for persons not on the ATL.
(ii) Other than sports persons the tax rate shall be 7 percent and it shall be 14 percent in case persons are not on the ATL.
The tax shall be collected by every prescribed person from non-resident at the time amount is paid.
The tax shall be minimum tax for S.152(2A)(b) and the provisions of sub clauses (i), (ii) and (iii) of clause (b) of sub section (3) and sub-section (4A) of section 153 shall mutatis mutandis apply 152(2B)
Provided that tax deductible under clause (a) of sub-section (2A) shall not be minimum tax where payments are received for sale of goods by a company being a manufacturer of such goods.
Section 152A: Payment for Foreign Produced Commercials
Tax to be deducted from non-resident while making payments for foreign produced commercial for advertisement on any television channel or any other media.
The tax rate shall be 20 percent of the gross amount and it shall be 40 percent if persons are not on the ATL.
The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment. The tax shall be final.
