The rate of tax on return on investment in sukuks received from a special purpose vehicle has been defined under Section 5AA of Income Tax Ordinance, 2001.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following are the rate of Tax on Return on investment in sukuks received from a special purpose vehicle:
The rate of tax imposed under section 5AA on return on investment in sukuks received from a special purpose vehicle shall be—
(a) 25% in the case the sukuk-holder is a company;
(b) 12.5% in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million; and
(c) 10% in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.
Following is the text of Section 5AA of Income Tax Ordinance, 2001:
5AA. Tax on return on investments in sukuks.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIB of Part I of the First Schedule, on every person who receives a return on investment in sukuks from a special purpose vehicle, or a company.
(2) The tax imposed under sub-section (1) on a person who receives a return on investment in sukuks shall be computed by applying the relevant rate of tax to the gross amount of the return on investment in sukuks.
(3) This section shall not apply to a return on investment in sukuks that is exempt from tax under this Ordinance.”
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