Pakistan: Legislation requires business payments to be made by “digital means”

Business expenses to be paid digitally to be allowed as tax deduction

Business expenses to be paid digitally to be allowed as tax deduction

The Tax Laws (Third Amendment) Ordinance, 2021—promulgated 15 September 2021—introduces certain enforcement measures intended to broaden the tax base, enforce tax compliance, and enhance documentation.

A new rule requires all companies to make business payments through digital means for such amounts to be claimed as deductible for tax purposes.

Accordingly, all companies—regardless of size—must make business payments through “digital means” in order for their expenses to qualify for tax admissibility. This implies that business taxpayers will no longer be allowed to pay business expenses by cheque or pay-order.

Read a September 2021 report [PDF 198 KB] prepared by the KPMG member firm in Pakistan


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