ISLAMABAD: Federal Board of Revenue (FBR) has issued reduced tax rate criteria for Shari’ah compliant companies, whose shares are traded on a stock exchange.
The FBR updated Income Tax Rules, 2002 which explained Rule 231H for reduced rate of tax for Shari’ah compliant companies.
231H. Reduced rate of tax for Shari’ah compliant companies in terms of Sub-Clause (a) of clause (18B) of Part-II of the Second Schedule to the Ordinance.—
In order to avail reduced rate of tax in terms of sub-clause (a) of clause (18B) of Part-II of the Second Schedule to the Ordinance, the Shari’ah compliant criteria for a company, whose shares are traded on a stock exchange, shall be as follows:-
(i) The business of the company shall be Halal i.e. it shall not include processing or manufacturing of pork, liquor, non-Halal products, pornographic material or any other activity not permitted by Shari’ah.
(ii) There should be Riba free financing on the balance sheet of the company, however the company may be leveraged through Islamic modes of financing obtained from licensed Islamic financial institutions.
(iii) All the investments made by the company should be one hundred percent Shari’ah compliant, therefore, it would not be permissible for the company to acquire non-Shari’ah compliant instruments or securities which yield interest or income that is not Halal.
(iv) The company shall be obliged to maintain free float of the company at thirty percent of the outstanding shares.
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