ISLAMABAD: The Federal Board of Revenue (FBR) has jacked up withholding tax (WHT) by 400 percent on payments to non-resident persons through debt cards and credit cards in order to discourage outflows of foreign exchange reserves.
The FBR issued circular number 2 of 2023 for explaining amendments to the Finance Act 2023. It states that section 236Y was introduced through Finance Act 2022, whereby payment to non-residents through a debit/credit card had been subjected to 1 percent withholding tax rate for Active Taxpayer List (ATL) persons and 2 percent for Non-ATL persons.
These payments to non-resident persons have substantial impact on foreign exchange outflow from the country. In order to discourage unnecessary outflow of foreign exchange reserves, withholding tax rates under section 236Y have been increased from l percent to 5 percent for ATL persons and from 2 percent to 10 percent for non-ATL persons through the Finance Act, 2023. It indicates that the FBR has increased tax rates by 400 percent for both categories of taxpayers as well as for non-filers.
According to the estimates shared by the State Bank of Pakistan (SBP) with parliamentarians before the last budget for 2023-24, around $70 to $100 million were utilized on monthly basis for making payments through credit card or debit cards, so annually this amount stood around $1 billion.
Through the Finance Bill, the FBR obtained powers under Section 236Y whereby Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards. Every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card or debit card or prepaid card transaction with a person outside Pakistan at the rate specified in Division XXVII of Part IV of the First Schedule. The advance tax collected under this section shall be adjustable. The Finance Bill 2022 proposed advance tax rate on amount remitted abroad through credit, debit or prepaid cards under section 236Y shall be 1 per cent of the gross amount remitted abroad.
hief Minister Ali Amin Gandapur on Friday de-notified his special assistant on science and technology and information...
Dr. Muhammad Fakhare Alam Irfan, a BS-22 officer of Pakistan Administrative Service , awaiting posting, has been...
Data of Chinese nationals in Islamabad has been initially compiled to take special security measures, along with the...
SC will take up next week important cases, including the appeal of the Sunni Ittehad Council against the decision of...
President Zardari approved issuance of retirement notification of Justice Shaukat Aziz Siddiqui on attaining the age...
President Asif Ali Zardari speaks during an interview in this still on January 29, 2024. — Facebook/Pakistan Peoples...