ISLAMABAD: The Federal Board of Revenue (FBR) is in the process of identifying corporate sector income tax exemptions up to Rs150 billion to be withdrawn from the Income Tax Ordinance 2001. Sources told Business Recorder here on Tuesday that the FBR has identified tax exemption of corporate sector with estimated cost of Rs150 billion that may be withdrawn either through Presidential Ordinance or through fresh finance bill in second half (Jan-June) period of current fiscal year. If these exemptions are withdrawn in current fiscal, it would become effective from the next fiscal year.
However, the timeframe of withdrawal of income tax exemptions has not been finalised yet.
The working done by the FBR showed that the corporate sector enjoyed income tax exemptions up to Rs150 billion and it is yet to see how much exemptions would be abolished in the next phase of legislation approval process.
Important exemptions of corporate sector available under the law included tax credit for investment in balancing, modernization and replacement of plant and machinery (corporate manufacturing sector) Rs65.168 billion impact; tax credit for enlistment in Stock Exchange (Companies opting for enlistment in a registered stock exchange) (Rs357 million); tax credit for newly-established industrial undertakings corporate industrial units (including corporate dairy farming) Rs5.573 billion; tax credit for industrial undertakings established before the first day of July, 2011 (Corporate industrial units including corporate dairy farming) Rs6.486 billion; Income tax exemption to the ECO Trade and Development Bank (The ECO Trade and Development Bank) (Rs495 million); Income tax exemption to Pakistan Mortgage Refinance Company Limited (Rs0.9 million).
Income tax exemption on any income derived by Sukuk holder in relation to Sukuk issued by "The Second Pakistan International Sukuk Company Limited", and the Third Pakistan International Sukuk Company Limited, including any gain on disposal of such Sukuk.
Sukuk holders (Rs2.771 billion impact); profit on debt derived by Hub Power Company Limited on or after the first day of July,1991 (Hub Power Company Limited), exemption impact of Rs1.66 million; any income of an agency of a foreign Government, a foreign national (company, firm or association of persons), or any other non-resident person approved by the federal government for the purposes of this clause, from profit on moneys borrowed under a loan agreement or in respect of foreign currency instrument approved by the federal government. Agencies of foreign governments, foreign nationals or any other non-resident person approved by the federal government (Rs6.557 billion); income tax exemption to the Collective Investment Schemes or a REIT Schemes Collective Investment Schemes and REIT Schemes that are distributing more than 90 percent of their incomes to certificate holders/shareholders. (Rs5.228 billion), Income tax exemption available to the Modarabas (Rs425 million); Venture capital companies and venture capital funds registered under Venture Capital Companies and Funds Management Rules, 2000 and a Private Equity and Venture Capital Funds( Venture capital companies venture capital funds, and Private Equity and Venture Capital Funds) Rs1 million impact; Distributions received by a taxpayer from collective investment schemes or mutual funds (which are debt or money market funds and do not invest in shares) out of capital gains investors investing in debt or money market mutual funds and collective investment schemes with revenue impact of Rs1 million; Income tax exemption available to the income derived by the Government of Kingdom of Saudi Arabia being dividend of the Saudi-Pak Industrial and Agricultural Investment Company Limited. Government of Kingdom of Saudi Arabia (Rs25 million); Income derived by Kuwait Foreign Trading Contracting and Investment Company or Kuwait Investment Authority being dividend of the Pak Kuwait Investment Company in Pakistan (Kuwait Foreign Trading Contracting & Investment Company, and Kuwait Investment Authority) Rs38 million revenue impact of exemption; Income received by a taxpayer from a corporate agricultural enterprise, distributed as dividend out of its income from agriculture.
Taxpayers receiving dividend income from corporate agricultural enterprises Rs43 million; any gain on transfer of a capital asset, being a membership right held by a member of an existing stock exchange, for acquisition of shares and trading or clearing rights acquired by such member in new corporatized stock exchange in the course of corporatization of an existing stock exchange. (zero impact); any gain by a person on transfer of a capital asset, being a bond issued by Pakistan Mortgage Refinance Company to refinance the residential housing mortgage market, during the period from the 1st day of July, 2018 till the 30th day of June, 2023) Persons deriving gain from bonds issued by Pakistan Mortgage Refinance Company) (zero percent impact); profit on debt derived by- (a) any foreign lender; or (b) any local bank having more than 75 per cent shareholding of the Government or the State Bank of Pakistan, under a Financing Agreement with the China Overseas Ports Holding Company Limited Foreign lenders or public sector banks/State bank having financing agreement with China Overseas Ports Holding Company Limited (zero revenue impact), Income tax exemption available to the Oil refineries Rs443 million revenue impact; Industrial undertakings engaged in the manufacture of plant, machinery, equipment and items with dedicated use for generation of renewable energy (Manufacturers of plant, machinery and equipment for use in generation of renewable energy sources) Rs11 million; income tax exemption available to the profits and gains derived by industrial undertakings set up for establishing and operating a halal meat production unit Halal meat production units (Rs21 million; industrial undertakings set up in the Provinces of Khyber-Pakhtunkhwa and Baluchistan Industrial undertakings set up in the Provinces of Khyber-Pakhtunkhwa and Baluchistan between 1st day of July, 2015 and 30th day of June, 2018. Revenue impact of Rs9 million, Income tax exemption to the profits and gains derived by a taxpayer from a transmission line project set up in Pakistan (Companies deriving income from transmission line projects in Pakistan) Rs7 million, Profits and gains derived by a taxpayer from an industrial undertaking, duly certified by the Pakistan Telecommunication Authority, engaged in the manufacturing of cellular mobile phones (Local cellular mobile phone manufacturers) Rs12 million, Profits and gains of a company from a green field industrial undertaking incorporated on or after the first day of July, 2019 Green field industrial undertakings (zero revenue impact), Royalty, commission or fees earned from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right Innovators and technical experts Rs2 million, income tax exemption available to the electric power generation projects on the profits and gains derived by a taxpayer from an electric power generation project set up in Pakistan on or after the 1st day of July, 1988. Rs26.888 billion; Income from exports of computer software or IT services or IT enabled services (exemption available to the exporters of computer software, IT services or IT enabled services) Rs1.239 billion revenue impact; Income tax exemption to the profit and gains derived by LNG Terminal Operators and Terminal Owners LNG Terminal Operators and Terminal Owners.
Rs732 million revenue impact; Income from social security contributions derived by the four provincial Social Security institutions Provincial social security institutions Rs5,017 million impact, Income tax exemption available to the start-ups Startups as defined in Clause (62A) of Section 2 of the ITO-2001. Revenue impact of Rs635 million, Income of individuals domiciled or companies and associations of persons resident in the erstwhile tribal areas individuals domiciled or companies and associations of persons resident in the ex-tribal areas; Rs4,454 million revenue impact, the provisions of Section 148 shall not apply on import of firefighting equipments by industrial undertakings set up in the special economic zones established by the federal government. Revenue impact of Rs23 million and the provisions of the Income Tax Ordinance shall not be applicable to the M/s TAISEI Corporation under the agreement between the National Highways Authority with revenue impact of Rs84 million.
Copyright Business Recorder, 2020
Comments
Comments are closed.