Federal Board of Revenue (FBR) has yet to endorse the suggestion of increasing taxes on non-filers’ cash withdrawals from banks
Islamabad: SECP Proposes 5% Cut in Withholding Tax for Corporate Sector. The Securities and Exchange Commission of Pakistan (SECP) has put forward a proposal for a 5% reduction in withholding tax on the corporate sector. The proposal, part of the tax recommendations for the Budget 2024-25, seeks to lower the withholding tax rate from 15% to 10%.
However, the Federal Board of Revenue (FBR) has yet to endorse the suggestion of increasing taxes on non-filers’ cash withdrawals from banks. This proposal remains under review.
According to officials, the primary aim of the SECP’s proposal is to bridge the tax gap between corporate and non-corporate businesses. Currently, corporate companies face a cumulative tax rate of 39.65% on profits, which includes a 29% income tax and a 15% tax on profit distribution. In contrast, tax rates for non-corporate businesses range from 0% to 35%.
Sources indicate that closing this tax rate gap would aid in documenting the economy. Additionally, the proposal includes charging non-bank financial companies at a reduced rate for five years and offering lower tax rates during the transition from non-profit to for-profit status, with a 5% tax in the first two years and a gradual 5% annual increase over the next four years.
Read More:
SECP Commissioner launches NBFI & Modaraba Year Book 2023
Another proposal under consideration would permit asset management companies to collect super tax, in addition to the currently allowed capital gains tax.
Conversely, FBR officials have not finalized the proposal to increase the tax on cash withdrawals for non-filers. The initial suggestion was to raise the tax to 0.9% on withdrawals exceeding Rs 50,000. Prime Minister has instructed a reassessment of this proposal, which aims to generate Rs 20 billion from non-filers by maintaining a 0.6% withholding tax on such transactions.
SECP Proposes 5% Cut in Withholding Tax for Corporate Sector
