Karachi, July 27, 2023 – The Federal Board of Revenue (FBR) has elaborated new withholding tax regime for motor vehicles, aiming to streamline the taxation process and generate revenue for the government.
(more…)Tag: withholding tax
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Federal Tax Ombudsman Directs FBR to Conduct Audit of Banks for Withholding Tax Compliance
Islamabad, June 22, 2023: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to regularly conduct audit of banks to check compliance with the withholding tax provisions.
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Pakistan Introduces Withholding Tax on Cash Withdrawal from Banks
Islamabad, June 9, 2023 – In a bid to enhance the documentation of the economy, Pakistan has implemented a withholding tax on cash withdrawals from banks. However, this tax will only apply to individuals who are not listed on the Active Taxpayers List (ATL) of the Federal Board of Revenue (FBR).
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Proposal to Abolish Withholding Tax Regime for Listed Companies
The Institute of Chartered Accountants of Pakistan (ICAP) has recommended the removal of the withholding tax burden imposed on listed companies by the Federal Board of Revenue (FBR).
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UNISAME opposes potential re-imposition of withholding tax on cash withdrawal
KARACHI: The Union of Small and Medium Enterprises (UNISAME) has voiced its opposition to reports suggesting that the government is considering the re-imposition of withholding tax on cash withdrawals.
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Foreign investors urge Pakistan to abolish withholding tax on telecom services
Foreign investors operating in Pakistan are calling on the country to abolish the withholding tax on telecom services.
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FBR collects over Rs81 billion from sale, purchase of property transactions during TY22
ISLAMABAD: Federal Board of Revenue (FBR) has collected over Rs81 billion from sale and purchase of property transactions during tax year 2022, official documents revealed.
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WHT share in direct taxes jumps to 67% despite omitting provisions
ISLAMABAD: Share of withholding tax (WHT) collection in total collection of direct taxes has increased to 67 during Tax Year 2022 despite elimination of many provisions related to the withholding taxes.
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Pakistan introduces automated system for withholding tax payments
ISLAMABAD: Pakistan has introduced an automated system for real-time payment for withholding tax. The system has been introduced through the Finance Act, 2022 by making amendment to the Income Tax Ordinance, 2001.
The Federal Board of Revenue (FBR), the apex tax collecting agency of Pakistan, issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through the Finance Act, 2022 to the Income Tax Ordinance, 2001.
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The FBR said that currently, withholding agents are required to collect and deduct tax at the time of making payment and deposit the same in government treasury within the prescribed time period.
Similarly, withholding agents are required to file quarterly and annual withholding statements which consumes time and resources of taxpayers leading to increased compliance cost.
Moreover, certain large withholding tax agents like banks, DISCOs, TELCOs, Government institutions etc. are still depositing tax through a single payment receipt for multiple taxpayers.
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“In order to streamline withholding tax collection and deduction mechanism, enabling provision for the placement of a fully automated system by the name Synchronized Withholding Administration and Payment System (SWAPS) has been introduced under section 164A of the Ordinance,” the FBR said.
A withholding agent notified under section 164A will be called a SWAPS agent.
The notified SWAPS agent will be integrated with Board and withholding tax will be deposited in government treasury on real time basis simultaneously at the time of making third party payment processed through SWAPS by the SWAPS agent.
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It will also result in auto populated withholding statements thereby saving time and reducing cost of compliance for the business.
SWAPS Payment Receipt (SPR) will be generated upon deposit of tax in this manner which will be a valid document for the purpose of claiming credit against tax payable under the provisions of this Ordinance.
In case if a notified SWAPS agent fails to integrate with the Board in the manner prescribed, the said agent will not be eligible for credit under Part X of Chapter III of the Ordinance and exemption under any of the provisions of the Ordinance.
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All other provisions of the Ordinance not specifically dealt with in newly inserted section 164A will mutatis mutandis apply on a notified SWAPS agent.
Corresponding changes have been made in section 164 of the Ordinance.
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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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