FBR to abolish 25 withholding taxes
"The FBR is considering options to reduce the WHT rate by 50 percent to bring it down from 50 to 25 percent in the coming budget," senior FBR officials confirmed to The News here on Wednesday.
The official data indicate that there are withholding taxes when the FBR collects an undisclosed amount as the tax equipment has collected the maximum amount of pre-minerals tax under Section 236 V, Rs1.23 million in tax collection by Pakistan Mercantile Exchange Limited under Section 236 T and a minimum amount of Rs0. 24 million from TV shows produced on other systems under Section 236 E of the Income tax Ordinance 2001 in the forthcoming financial year.
The FBR found that approximately 7 to 10 withholding taxes contributed to the collection of 85 percent under this head with a total tax rate of 50 percent.
The FBR has so far collected Rs800 billion in tax withholding this fiscal year and the Board is considering eliminating about half of the total WHT in a bid to ensure ease of doing business in Pakistan. The FBR now aims to eliminate all those WHT's where they cause obstacles and lead to an increase in costs.
"The government has decided to keep the revenue generated by the waves from being trapped in the next budget.
Tax analysis shows that the FBR has generated a large chunk of blocking foreign taxes, wages, dividends, payments to non-resident people, payment of goods, services and contracts, exports, consumer electronics, income from goods, deductions from banks and the purchase / transfer of immovable and other assets.
For imports, the FBR has collected Rs200 billion so far in this financial year from July 2018 to mid-May 2019. The withheld tax collection from dividends has been hit in the current fiscal year because the last PML-N government is dropping the top tax hike from Rs0.4 million to Rs1.2 million in one measure but resulting in revenue accumulation due to WHT from last year's R1110 million to Rs62 billion so far in the current financial year, proving a decrease of over 1 percent. -45.
Dividend revenue so far stands at Rs47 billion in this financial year compared to Rs50 billion in the same period of the previous financial year. WHT due to interest on debt has increased to Rs50 billion so far this financial year compared to Rs38 billion during the same period of the previous financial year. The tax deductible for non-resident income increased by 80% and stands at Rs29 billion so far this financial year.
The withholding tax on the payment of goods, services and contracts fetched by collections of Rs185 billion has so far been budgeted at Rs215 billion during the same period of the last financial year. Revenue from assets rose to Rs18 billion, awards and winning Rs12 billion, sales of POL products Rs7 billion, bankruptcy of Rs26 billion, electricity use (commercial and industrial) and acquisition / transfer of obsolete assets of Rs11.4 billion.
Read more:
How to become Filer
How to pay income tax
What is withholding tax
The official data indicate that there are withholding taxes when the FBR collects an undisclosed amount as the tax equipment has collected the maximum amount of pre-minerals tax under Section 236 V, Rs1.23 million in tax collection by Pakistan Mercantile Exchange Limited under Section 236 T and a minimum amount of Rs0. 24 million from TV shows produced on other systems under Section 236 E of the Income tax Ordinance 2001 in the forthcoming financial year.
The FBR found that approximately 7 to 10 withholding taxes contributed to the collection of 85 percent under this head with a total tax rate of 50 percent.
The FBR has so far collected Rs800 billion in tax withholding this fiscal year and the Board is considering eliminating about half of the total WHT in a bid to ensure ease of doing business in Pakistan. The FBR now aims to eliminate all those WHT's where they cause obstacles and lead to an increase in costs.
"The government has decided to keep the revenue generated by the waves from being trapped in the next budget.
Tax analysis shows that the FBR has generated a large chunk of blocking foreign taxes, wages, dividends, payments to non-resident people, payment of goods, services and contracts, exports, consumer electronics, income from goods, deductions from banks and the purchase / transfer of immovable and other assets.
For imports, the FBR has collected Rs200 billion so far in this financial year from July 2018 to mid-May 2019. The withheld tax collection from dividends has been hit in the current fiscal year because the last PML-N government is dropping the top tax hike from Rs0.4 million to Rs1.2 million in one measure but resulting in revenue accumulation due to WHT from last year's R1110 million to Rs62 billion so far in the current financial year, proving a decrease of over 1 percent. -45.
Dividend revenue so far stands at Rs47 billion in this financial year compared to Rs50 billion in the same period of the previous financial year. WHT due to interest on debt has increased to Rs50 billion so far this financial year compared to Rs38 billion during the same period of the previous financial year. The tax deductible for non-resident income increased by 80% and stands at Rs29 billion so far this financial year.
The withholding tax on the payment of goods, services and contracts fetched by collections of Rs185 billion has so far been budgeted at Rs215 billion during the same period of the last financial year. Revenue from assets rose to Rs18 billion, awards and winning Rs12 billion, sales of POL products Rs7 billion, bankruptcy of Rs26 billion, electricity use (commercial and industrial) and acquisition / transfer of obsolete assets of Rs11.4 billion.
Read more:
How to become Filer
How to pay income tax
What is withholding tax
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