The issue of the application of sales tax on services supplied by non-residents and unregistered people is being handled independently by the Federal Board of Revenue (FBR) and provincial tax authorities through distinct legislation.
A succinct explanation of an apparently straightforward but really complex issue has been created, according to a study by renowned tax expert Ashfaq Tola. Tola has outlined and investigated the provincial withholding policies that apply to services rendered by non-residents and unregistered individuals. For a clearer and more full understanding, each province will be discussed separately.
The Sindh Sales Tax on Services Act, 2011 (the “SSTS Act”) sets the rules for the sales tax on services in Sindh. The following treatment guidelines have been established by the SSTC Act for both non-residents and individuals who conduct business in Sindh or who have received services there.
Tax on the sale of services must be applied to all services rendered by registered people, regardless of whether they were rendered by residents or non-residents, with regard to the taxable services listed in the Second Schedule to the SSTS Act. Additionally, regardless of whether this resident person is the ultimate customer or not, if these services are delivered to a resident by a non-resident, it will be taxed.
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