ISLAMABAD: The Federal Board of Revenue (FBR) has said that tax has been imposed on foreign payments made by exchange companies.
The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments brought through Finance Act, 2022 to the Income Tax Ordinance, 2001.
READ MORE: Minimum tax for commercial importers enhanced: FBR
The FBR said that two new sub-sections (1DC) and (1DD) have been inserted in section 152 of the Income Tax Ordinance 2001.
Under sub-section (DC), service charges/commission/fee, by whatever name called, paid by an exchange company licensed by the State Bank of Pakistan (SBP) to a non-resident person has been brought under the tax net.
READ MORE: Tax through electricity connections on retailers, service providers
Now these exchange companies have been made liable to deduct tax at the time of making payment of service charges or commission or fee to the global money transfer operators, international money transfer operators or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances.
READ MORE: FBR explains income tax on export of services
Similarly, under sub-section (1DD), every banking company has been made liable to deduct tax at the time of making payment to card network company or payment gateway or any other person, on any transaction fee or licensing fee or service charges or commission or fee by whatever name called or interbank financial telecommunication services.
This final tax on the income of non-resident person and rates have been provided in Division IV of Part I of First Schedule. Corresponding changes in this regard have been made in sections 6 and 8 of the Ordinance.
