- Drops from 0.75% to 0.5%
ISLAMABAD: The rate of minimum tax on turnover of oil marketing companies has been brought down from 0.75 percent to 0.5 percent under the Finance Act, 2022.
According to the FBR’s budget explanatory circular issued on Thursday, the minimum tax on turnover under Section 113 is payable by a resident company, permanent establishment of a non-resident company, an individual or an AOP having a turnover of Rs 100 million and above under certain specific situations mentioned therein.
Following major changes have been introduced in the minimum tax on turnover regime: Previously, a person who had paid minimum tax on turnover under section 113 was allowed to carry forward the said tax for five succeeding tax years. Now this carry forward has been restricted to three years. The rate of minimum tax on turnover of oil marketing companies had been brought down from 0.75 percent to 0.5 percent.
Following changes have been incorporated with regard to withholding tax on import under section 148 of the Ordinance.
a) Withholding tax on imports collected at one percent and two percent on goods falling under Part I and II of Twelfth Schedule to the Ordinance respectively is adjustable for an industrial undertaking if goods have been imported for own use. In numerous circumstance, goods imported by an industrial undertaking for own use may fall under Part III of Twelfth Schedule to the Ordinance on which tax at 5.5 percent is collectible at import stage. This resulted in a situation whereby tax collected at 5.5 percent on import of goods by an industrial undertaking for its own use became minimum tax. For the purpose of streamlining, tax collectible from an industrial 13 undertaking on import of all goods for own use has been made adjustable.
Tax collectible under Section 148 on import of edible oil, packaging material, paper and paper board, and plastics has been made minimum tax whether imported by an industrial undertaking for own use or by a commercial importer.
The rate of withholding tax on import of goods falling in Part II of Twelfth Schedule of the Ordinance has been enhanced from two per cent to 3.5 percent for commercial importers, which shall be minimum tax. Certain goods have been shifted from Part II to Part I of the Twelfth Schedule.
The goods included in Part I are subject to tax at one per cent irrespective of import by industrial undertaking or commercial importers, the FBR added.
Copyright Business Recorder, 2022