NBR squeezes source tax benefits for some exporters
In its clarification, the NBR has asked exporters to take new tax certificates while banks have been asked to collect taxes from them at a new rate
The National Board of Revenue (NBR) issued a new circular on Sunday clarifying its 4 March circular that allowed some exporters enjoying less than 12% corporate tax to pay source tax below 1%.
In its clarification, the NBR has asked exporters to take new tax certificates while banks have been asked to collect taxes from them at a new rate.
However, it did not clarify the new tax rate. The new order is believed to increase source tax for some exporters.
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On 4 March, the tax regulator introduced new rules allowing exporters, who enjoy corporate tax at a 12% or below rate, to pay tax at source at a rate lower than existing 1%.
As per the new circular, some sectors or institutions may be taxed at a higher rate than 1%, according to tax officials.
A senior NBR official on condition of anonymity told TBS, "The source tax benefits for some export sectors were squeezed through the 4 March order. This may result in additional taxation on them from that date onwards."
Another NBR official added, "As per the new order, some exporters will be allowed to pay tax at a rate of less than 1%, while some may be taxed at a higher rate."
At present, almost all exporters are paying source tax at a 1% rate.
