In general, payments made due to dividends, interest, royalties and fees on technical services income from Pakistani sources are subject to a withholding tax of 15%, the tax of which must be withheld/deducted from the gross amount paid to the beneficiary. The majority of these payments do not result in a 100% increase, even if the beneficiaries do not appear on the ATL. 233A: Commission earned by a member of the stock exchange. That detention was also declared inapplicable as from 1 March 2019. It should be clarified whether such an omission would make the withholding tax provided for in Article 233 applicable to the commission received by the members of the stock exchange. Calculated on 20% of the VAT withholding tax system, there is an anti-fraud measure that can be applied to specific customers – usually authorities that pay their customers. The same applies to advertising services, including non-resident providers. In these cases, the taxpayer must be a taxpayer registered for withholding tax. Withholding taxes are levied on a variety of payments made by source taxpayers established in local law to resident taxpayers (commonly referred to as “prescribed persons”) and on payments made to non-residents in connection with Pakistani source income. Joint payments to non-residents, the applicable tax rate under local law and any relief available under the respective tax treaty are listed below: In other cases, the following tax rates apply (for individuals and associations of persons): As of July 1, 2020, a whT rate of 10% will apply to the payment of debt gains from debts owed to non-residents for debt securities issued by the federal government under the Government Debt Act. were issued. 1944.
These debt securities must be purchased in a bank account held abroad, in a non-resident rupee account that can be repatriated or in a foreign currency account with a banking company in Pakistan. The tax thus deducted is a final tax without the need for non-residents to file a tax return in Pakistan. Under local law, non-residents who do not have a PE in Pakistan are subject to withholding taxes (WHT) on payments such as fees for technical services, royalties, dividends, interest, insurance premiums, fees for digital services, etc. The withholding tax rate applicable to these payments is between 5 % and 20 %, subject to any relief under the double taxation agreement. The withholding tax is considered to be the final tax payable by the non-resident. Resident taxpayers and non-residents who have a P/E ratio in Pakistan are subject to withholding taxes on a number of transactions, including the sale of goods, the performance of contracts and the provision of services. These taxes are generally considered to be minimum transaction-based taxes (with the exception of the sale of goods by a manufacturer or company listed on the Pakistan Stock Exchange) and are deducted from a person`s annual tax liability. It should be noted that some withholding taxes are increased by one hundred percent if a taxpayer does not appear on a list maintained by the tax authorities with information about taxpayers who file their tax returns correctly. This list is called the Active Taxpayers List. Art. 231A: Cash withdrawals by persons not on the list of active taxpayers [ATL]. The impact on withholding tax/local law provisions on the following transactions have been removed by the 2021 Finance Law: Exporters and certain financial service providers can request a suspension of VAT.
The importation of certain staple foods and agricultural supplies is exempt from import turnover tax. Pakistan levies taxes on its people on their global income. A non-resident is taxed only on Pakistani income, including income earned or deemed to have been received in Pakistan or deemed to have been accumulated or generated in Pakistan. 236HA: Sale of petroleum products to service station operators or dealers who do not receive any commission or discount. 231AA: Bank instruments sold/cancelled in cash by persons not listed on ATL. VAT is due at the time of delivery. In the case of services, this is usually the earlier date on which the taxable delivery or payment is made. In the case of goods, this is usually the time when the invoice is settled with a payment. The only major payroll tax is the federal income tax. 236Y: Amounts transferred abroad by credit, debit or prepaid card. The import tax is due at the time of customs clearance in Pakistan.
The following tax rates apply if the person`s income from salary exceeds 75% of taxable income: Pakistani companies registered for VAT must present a tax invoice. Simplified invoices are allowed for retail sales. Invoices should include the following details:. . . .