Highlights of Tax Laws (Amendment) Ordinance, 2021

Highlights of Tax Laws (Amendment) Ordinance, 2021

ISLAMABAD: The federal cabinet approved the Tax Laws (Amendment) Ordinance, 2021 in its meeting held on February 09, 2021.

According the approved draft of the ordinance, the government is making certain amendments in: Customs Act, 1969; Sales Tax Act, 1990; Federal Excise Act, 2005; and Income Tax Ordinance, 2001.

A major relief has been granted to holders of Roshan Digital Accounts (RDAs). The tax relief has been allowed:

— The exemption / concessions granted to non-residents holding Pakistan Origin Card (POC),  National Identity Card for Overseas Pakistanis (NICOP), Computerized National Identity Card (CNIC) for encouraging foreign remittances

— Exemption to profit on debt income of RDAs

— If investment is made through RDAs

>> Reduction in tax rate from 15% to 10% on capital gain on disposal of shares in stock market— as final tax

>> Taxation of sale and purchase of immovable property @ 1% as final tax in lieu of capital gain tax

>> Reduction in tax rate from 20% to 10% on profit on debt from Naya Pakistan Certificates as final tax

— Waiver from filing of return to non-resident RDA holders and resultant investors in shares, Naya Pakistan Certificates and immovable property

— Placement of above non-residents on ATL to avoid higher taxation

— Exemption to Islamic Naya Pakistan Certificate Company Ltd

>> Corporate income tax

>> minimum tax on turn over

>> Withholding taxes

Other tax concessions granted under various heads, which included:

— Exemption from withholding tax u/s 153(1)(a) for whole of supply chain  of locally manufactured Mobile Phone Devices

— Imposition of withholding tax on vehicles, if sold within 90 days of delivery – to discourage investors/  “on money” trend  

— Extension of date of commencement of business for electricity transmission lines from 2018 to 2022 on recommendation of Cabinet Committee on CPEC – not even a single project / company qualified for exemption before change (Pak Matiari-Lahore Transmission Line Co.)

— Exemption from withholding tax u/s 153(1)(b) on services provided by National Telecommunication Company (NTC) –the tax constituted minimum tax hence great hardship

— Cotton Ginners –Tax liability to be equal to 1% of turnover as final tax. The tax regime existent upto 30-06-2019 proposed to be restored in line with 1994- agreement.

— Extension of applicability of super tax on banking companies from tax year 2022 onwards

— Withholding and turnover tax rates for dealers, distributors, wholesalers and retailers of fertilizer and fast moving consumer goods proposed to be reduced to 0.25%, provided they get themselves registered under Sales Tax Act, 1990 within 60 days— for promotion of documentation and equity

— Exemption from withholding tax on temporary imports by international athletes for SAF Games.