Karachi, June 28, 2023: Following strong criticism from stakeholders, Pakistan has decided to withdraw its proposal to grant immunity to the inflow of foreign remittances.
The proposed amendment, which aimed to increase the monetary limit for immunity on foreign remittances, has been scrapped after facing opposition.
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Under the Finance Bill, 2023, the government had suggested raising the monetary limit for immunity on foreign remittances received from abroad through permissible channels from Rs 5 million to an amount equivalent to $100,000 per annum. However, the proposal was rejected by the National Assembly of Pakistan.
Tax experts at PwC A. F. Ferguson Chartered Accountants Firm confirmed that several other proposals included in the Finance Bill, 2023 were also not approved by the National Assembly. These proposals included:
1. Reduction of minimum turnover tax from 1.25% to 1% for listed companies.
2. Tax credit for tax years 2024 to 2026 for individuals constructing new residential houses.
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3. Extension of the exemption period on profits and gains from the sale of immovable property or shares of Special Purpose Vehicle to any REIT scheme from June 30, 2023, to June 30, 2024.
4. Reduction in tax liability on income from new construction projects for builders.
5. Reduction in tax liability on income from the business of a youth enterprise.
6. Increase in the threshold of the Special Tax Regime for SMEs with turnovers up to Rs 800 million (from Rs 250 million) and inclusion of individuals engaged in the provision of IT services and IT-enabled services under the Special Tax Regime. Conditional tax holiday for SMEs exclusively set up as agro-based industries in rural areas.
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7. Reduction in tax liability for banking companies on income arising from additional advances to specified sectors.
8. Non-applicability of advance tax on the purchase of immovable property by overseas Pakistanis through the Roshan Digital Account.
The rejection of these proposals indicates a shift in the government’s approach and highlights the importance of considering stakeholder feedback in the formulation of taxation policies. The decision to withdraw the proposal on granting immunity to foreign remittances demonstrates a willingness to listen to public concerns and prioritize a balanced approach to taxation.
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While the proposal for granting immunity to foreign remittances has been scrapped, the Finance Act, 2023 will incorporate other approved measures that will impact the taxation landscape in Pakistan.
