Exporters earning more than Rs500 million can qualify for full super tax relief if export proceeds exceed 80% of annual turnover from Tax Year 2027.
ISLAMABAD: The Federal Board of Revenue (FBR) has set conditions for a super tax exemption for exporters from Tax Year 2027 onwards under amendments introduced through the Finance Act, 2026.
The FBR has explained changes to Section 4C, which governs super tax on high-earning persons, through Division IIB of Part I of the First Schedule and Clause 104(B) of Part IV of the Second Schedule of the Income Tax Ordinance, 2001.
Super tax rates revised for Tax Year 2027
The amended provisions revise the super tax rates applicable to high-income taxpayers.
A 10% super tax will apply to the following categories where income exceeds Rs150 million:
• Income of a banking company exceeding Rs150 million.
• Income of a person computed under Part I of the Fifth Schedule, subject to the limit specified in Rule 4 of that Part.
• Income of a person deriving income from the sale of any kind of fertiliser.
For other persons, super tax will apply at 8% where income exceeds Rs500 million.
The revised provisions effectively remove super tax for persons with income of up to Rs500 million, except for the specific categories subject to the 10% rate.
Exporters can qualify for complete super tax exemption
The FBR has also introduced Clause 104(B) in Part IV of the Second Schedule, providing complete relief from super tax for qualifying exporters.
Under the new provision, exporters with income exceeding Rs500 million can claim a complete exemption from super tax if their export proceeds realised during the tax year represent more than 80% of their total turnover for that year.
This means an exporter must satisfy the prescribed 80% export-proceeds-to-turnover threshold to qualify for the full super tax exemption.
Super tax rate reduced from 10% to 8%
The amended framework also reduces the super tax rate from 10% to 8% for persons earning more than Rs500 million.
However, this reduction does not apply to the specific categories subject to the 10% rate, including banking companies, persons covered by Part I of the Fifth Schedule and persons deriving income from the sale of fertiliser.
New framework provides relief to exporters
The revised super tax regime provides significant relief to qualifying exporters from Tax Year 2027, provided they meet the prescribed export-proceeds requirement.
At the same time, the reduction in the general super tax rate from 10% to 8% lowers the tax burden on other high-income taxpayers earning more than Rs500 million, while the specified categories remain subject to the higher rate.