The Federal Board of Revenue (FBR) has raised the withholding tax (WHT) rate for non-active tax filers or those who are not on the Active Taxpayers List (ATL) in an effort to encourage people to submit taxes.
In accordance with a Wednesday circular, non-ATL filers who withdraw Rs. 50,000 from their bank would be taxed Rs. 303. A tax of Rs. 450 will be applied to withdrawals between Rs. 55,000 and Rs. 75,000.
However, these levies will not apply to Pakistani government organizations or foreign diplomats.
WHT Also Raised on Credit/Debit Card Transactions For Non-Filers
In addition, the circular stated that “withholding tax (WHT) rates have been increased from 1% to 5% for ATL persons and from 2% to 10% for non-ATL persons” in order to prevent the excessive outflow of foreign exchange reserves via credit/debit card payments.
Additionally, the circular indicated that the WHT on motor cars had been raised upward by 200% for those who were not on the ATL to be respectively 18%, 24%, and 30% of the value of motor vehicles with engine capacities of 2001cc to 2500cc, 2501cc to 3000cc, and above 3000cc.
Non-ATL residents will pay rates that are 200% higher (18%, 24%, and 30%) for the same engine capacity.
The fixed amount of vehicle tax has been substituted for those who are on the ATL with the collection of tax at the rate of 6%, 8%, and 10% of the value of vehicles with engines ranging from 2001 cc to 2500 cc, 2501 cc to 3000 cc, and over 3000 cc, respectively.
Additionally, it was argued that where engine capacity was irrelevant. The car is worth at least Rs. 5,000,000 or more, “the rate of tax collectible will be 3% of the import value, as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.”
To read our blog on “Pakistan implements 10% WHT on card-based foreign payments,” click here.
