Gaming the tax system

The government has reduced the withholding tax from 15 per cent to five per cent for digital payments made at restaurants, which includes payments made with debit or credit cards. But some companies are still charging the full 15 per cent tax even on card payments. These companies will most likely tell the FBR at the end of the tax year that they have only collected five per cent tax and, in this way, will keep the remaining 10 per cent of withholding tax collected as their own profit.

The FBR should therefore ask citizens to send pictures of receipts where 15 per cent withholding tax is charged on card payments along with the company’s name and, at year end, ensure that these culprits pay the full 15 per cent tax on all their sales to the government and also pay additional fines for not adhering to FBR rules.

Engr Shahryar Khan Baseer

Islamabad