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FBR updates WHT rates on payment to non-residents

FBR updates WHT rates on payment to non-residents

ISLAMABAD: Federal Board of Revenue (FBR) updated withholding tax rates on payment made to non-residents for tax year 2021 under Section 152 of Income Tax Ordinance, 2001.

The FBR updated withholding tax card 2020-2021 (up to June 30, 2020) after incorporating amendments made through Finance Act, 2020.

According to the withholding tax rates:

Under Section 152(1), every person shall deduct tax while making payments for royalties and fee for technical payments to non-resident.

The withholding tax rate shall be 15 percent of the gross amount and it shall be increased by 100 percent in case the person is not on the Active Taxpayers List (ATL).

Every person paying royalty or fee for technical services to a non-resident shall withholding tax on payment to non-resident person at the time the royalty or fee for technical services is actually paid

The tax shall be minimum tax as per section 6 read with section 8.

Under section 152(1A), the tax will be deducted from a non-resident person on the execution of;

  1. a) Contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project.
  2. b) Any other contract for construction or services rendered relating there to.
  3. c) Contract for advertisement services rendered by TV Satellite Channels.

The tax rate shall be 7 percent of the gross amount

The tax shall be collected by every person from non-resident person at the time the amount is actually paid.

The tax shall be minimum tax on the income of non-resident person arising from a contract.

Under Section 152(1AA), the tax will be deducted from non-resident on any payment of insurance premium or re-insurance to a non-resident person.

The tax shall be 5 percent of gross amount and 10 percent for persons not appearing in ATL.

The tax shall be collected by every person making the payments to non-resident person at the time the amount is actually paid.

The tax shall be minimum tax.

Under Section 152 (1AAA) tax will be deducted on payments for advertisement services from non-resident person relaying from outside Pakistan.

The tax rate shall be 10 percent of the gross amount.

The tax shall be collected by every person making payment to non-resident at the time the amount is actually paid.

The tax shall be minimum tax.

Under Section 152(1C), the tax shall be deducted on remittance outside Pakistan, of fee for off-shore digital services, chargeable to tax u/s 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan.

The tax rate shall be 5 percent of the gross amount.

The tax shall be collected by banking company or financial institution from non- resident at the time the amount is actually paid.