Minimum tax for commercial importers enhanced: FBR

Minimum tax for commercial importers enhanced: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) said that withholding tax for commercial importers has been enhanced to 3.5 per cent from 2 per cent.

The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through Finance Act, 2022 to the Income Tax Ordinance, 2001.

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The FBR said that the rate of withholding tax on import of goods falling in Part II of Twelfth Schedule of the Ordinance has been enhanced from 2 per cent to 3.5 per cent for commercial importers, which shall be minimum tax.

Following changes have been incorporated with regard to withholding tax on import under section 148 of the Income Tax Ordinance 2001.

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Withholding tax on imports collected at 1 per cent and 2 per cent on goods falling under Part I and II of Twelfth Schedule to the Ordinance respectively is adjustable for an industrial undertaking if goods have been imported for own use. In numerous circumstance, goods imported by an industrial undertaking for own use may fall under Part III of Twelfth Schedule to the Ordinance on which tax at 5.5 per cent is collectible at import stage. This resulted in a situation whereby tax collected at 5.5 per cent on import of goods by an industrial undertaking for its own use became minimum tax. For the purpose of streamlining, tax collectible from an industrial undertaking on import of all goods for own use has been made adjustable.

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Tax collectible under section 148 on import of edible oil, packaging material, paper and paper board, and plastics has been made minimum tax whether imported by an industrial undertaking for own use or by a commercial importer.

Certain goods have been shifted from Part II to Part I of the Twelfth Schedule. The goods included in Part I are subject to tax at 1 per cent irrespective of import by industrial undertaking or commercial importers.

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