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Pakistan: Budget 2019, direct and indirect tax proposals

Pakistan: Budget 2019, direct and indirect tax proposal

The budget 2019 contains measures that are expected to be included in the Finance Bill 2019 and that relate to direct and indirect taxes and certain other fiscal laws.


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Among the measures in the budget concerning income tax and sales tax are the following:

  • Substitution of the term “filers” with “active taxpayers list”
  • A proposal to move toward a more progressive tax system
  • A strategy for offshore assets of Pakistanis to be brought within the fold of domestic taxation
  • Changes to the tax rules for capital gains realized on immovable property
  • A proposal to tax additional income of banks from additional investments
  • An enhanced rate of tax on income from profit from debt
  • Disallowance of a deduction by businesses concerning amounts of commission paid when exceeding 0.2% of the gross amount of supplies
  • Repeal of an initial allowance of 15% with respect to buildings
  • Extension of the useful life schedule for intangibles (from 10 years to 25 years)
  • An expanded tax credit for industrial undertakings on the purchase of plant and machinery
  • Authority to obtain a report from a Chartered Accountant to determine the fair market value of assets, products, expenses, or services at the time of the transaction
  • Changes to the withholding tax with respect to certain services
  • Royalties payable to resident persons to be subject to a deduction of adjustable tax at a rate of 15%
  • Measures relating to sales tax rules and sales tax rates

Read a June 2019 report prepared by the KPMG member firm in Pakistan

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