Islamabad: The federal government is considering terminating the preferential tax regime currently offered to foreign companies working in Pakistan — with the move expected to increase revenue by nearly PKR 22 billion, according to a news source.
Reportedly, this is one of the few measures that the Federal Board of Revenue (FBR) is considering in order to meet the IMF’s target of PKR 5.1 trillion in revenue for the fiscal year (FY) 2020-21. However, a final decision on the matter has not yet been made.
As per the information available, the board has proposed that the tax withheld from contractual payments to permanent establishments of non-resident companies should be treated as the “minimum” withholding tax. Currently, any tax that these companies pay is adjustable.
The proposal is expected to be given a final approval by Prime Minister Imran Khan. This will allow the government to collect taxes from foreign companies in the same way as domestic companies — putting them both on an equal footing.
