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FBR Pakistan Announces 15% to 50% Tax Rates on Bank Accounts, Debt Instruments
The Federal Board of Revenue
(FBR) in Pakistan has specified different tax rates under Section 151 of the
Income Tax Ordinance, 2001 for various deposit schemes and debt
instruments.
Separate tax rates of 15% and 30%
have been set for individuals and entities listed on the Active Taxpayers List
(ATL) versus those not listed.
For individuals on the ATL:
- The tax rate on profit from
debt (e.g. bank accounts, post office accounts, government securities) is
15%.
For individuals not on the ATL:
- The higher tax rate of 30%
applies to profit from the same sources.
The 15% and 30% tax rates
specifically apply to:
- National savings schemes and
post office accounts managed by the government
- Profit on accounts and deposits with banks
and financial institutions
- Profit on securities issued by the federal,
provincial or local governments
- Profit from bonds, debentures and other debt
instruments issued by banks and financial firms to non-financial entities.
For corporate entities:
- Companies on the ATL face a 25%
tax on profit from Sukuk issued by special purpose vehicles.
- However, companies not on the
ATL are subject to a higher 50% tax on such income.
For individuals and associations of persons:
- Those earning over PKR 1
million annually face a 12.5% tax if listed on the ATL, and 25% otherwise.
- Those earning under PKR 1
million annually pay 10% tax if listed on the ATL, and 20% otherwise.
These new tax rates will likely
influence how individuals and businesses invest in Pakistan. However, taxpayers
are advised to consult tax experts to fully understand their tax obligations
and liabilities under the new rates.
The FBR notification states that
the tax rates comply with Section 151 of the Income Tax Ordinance, 2001.
