The memorandum issued by A. F. FERGUSON & CO. on the Finance Bill 2022 in the federal budget (2022-23) detailed that enabling withholding provisions are also being introduced in section 152 of the Income Tax Ordinance 2001.
The banking companies will be responsible for withholding tax while making payments on account of any transaction fee, licensing fee, service charges, commission fee, or interbank financial telecommunication services.
The exchange company licensed by the State Bank of Pakistan (SBP) will be required to withhold tax while making payments to non-resident global money transfer operators, international money transfer operators, or other persons on account of service charges, commission, or fees in relation to international money transfers or other cross border remittances facilitating outward remittances.
In the case of the retention of the abovementioned amounts by the non-resident persons, the local banking or exchange company will be required to collect the amount of advance tax from such persons.
Non-residents protected by the double tax treaties may be entitled to invoke the business profits article to claim exemption from such tax.
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