Islamabad: The Federal Board of Revenue (FBR) has adopted a new policy to decrease withholding tax provisions while implementing measures that directly target wealthy individuals, news sources reported on November 13.
The policy will result in the collection of an additional PKR 250 billion in direct taxes, resulting in better management of resources. As per the details, the FBR and the federal government have activated the tax provisions introduced in the current year’s budget (2022-23) to target the super-rich. These amendments aimed to tax the affluent and wealthy classes by incorporating measures such as the super tax, the CVT on overseas assets, presumed rental income on the wealthy’s assets, and higher rates for high-profit enterprises such as banks.
According to the FBR, the government is taking steps to lower the percentage of withholding tax in the tax regime. The percentage contribution of withholding taxes and indirect taxes was lowered to 65.8% in the first four months of the existing tax year, down from 67.15% in the same period the previous year.
It is vital to note that Pakistan has the lowest tax-to-GDP ratio in Asia, and the majority of taxes are collected through indirect taxes such as GST and withholding tax, which is not class-based. The FBR has begun revising the tax structure on the advice of the International Monetary Fund (IMF), which has recommended that the government transform the current tax structure into a more sustainable one.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
