Non-resident mediapersons’ income: WHT to remain final discharge of tax: FBR

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue has clarified that the withholding tax shall remain final discharge of tax on the income of non-resident mediapersons. 

According to the income tax circular issued here on Saturday, the withholding tax provisions applicable on payments to a non-resident mediaperson relaying advertisement from outside Pakistan have also been consolidated under section 152. The withholding tax shall remain final discharge of tax on the income of the non-resident media person. This was previously covered under section 153A which has now been replaced. The withholding tax provisions applicable on payments to Permanent Establishment of a non-resident person on account of sale of goods, rendering of or providing services or execution of a contract, have been consolidated with other payments to non-residents covered under section 152.

The withholding tax provisions regarding payments made to non-residents, such as royalty payments, technical assistance fee payments, insurance payments etc are dealt with section 152 of Income Tax Ordinance, 2001. However, withholding tax provisions regarding payments in respect of contracts, supply of goods, or services to Permanent establishments of a non-resident, were placed in section 153 which mostly deals with residents. This resulted in complications, particularly, when treatment of withholding tax rates  for resident companies were changed, for example, treating them as final tax or minimum tax, the rates for PEs of non-resident companies also changed automatically, which otherwise are protected by double taxation agreements between Pakistan and other countries.