Introduction to Withholding Taxes in Pakistan

Introduction to Withholding Taxes in Pakistan

Overview of Introduction to Withholding Taxes in Pakistan

This introduction to Withholding Taxes in Pakistan enables taxpayers and withholding agents to understand withholding taxes in Pakistan and how to deal with them.

Issues of federal and provincial taxes require close analysis in the context of virtually all business transactions, even in an era when transactions primarily motivated by tax considerations have diminished.

Withholding taxes addresses and introduce the profession all responsibilities and ethical dilemmas that face tax professional in today’s challenging and increasingly complex tax environment.

A withholding tax agent should be able to:

  • Identify the provisions, dos and donts of advance withholding tax under Income tax and Sales tax.
  • You will be exposed to tax reporting requirements of your business and its owners, and establish a plan to account and pay them.
  • Identify loopholes in compliance in order to avoid huge fines and penalties under law.

What is withholding tax for Government of Pakistan

  • Main Source of Revenue by Govt.
  • Almost 70 percent revenue source as reported in 2017
  • Scope is increasing
  • Inherited from Income Tax Act, 1922 in which withholding concept of Salary and interest was present only.
  • In Income Tax Ordinance 1979 major scope extended in 1990.
  • Scope further enhanced by introducing concept of non filer in 2014 Finance Bill.

Tax Obligations as Withholding Agent

  • Filing of withholding statements.
  • Penalties for non filing even tax deducted but statements could not filed in time.
  • Filer and Non filer status identification.
  • Audits of withholding agents and a lot of record keeping.

Key points to consider if you’re a Withholding Tax Agent in Pakistan

Course participants will know

  • What is withholding tax and responsibility of withholding agent
  • Different rates of withholding taxes under Federal & sales tax Laws
  • Transaction wise withholding agents
  • Exemptions
  • Concept of Filer and Non Filer
  • Handling day to day issues
  • Penalties and offences for non-compliance
  • Annual and monthly reporting
  • Procedures – Pre-audit, During the audit and Post audit

What if you don’t pay your taxes

  • If you are not paying taxes, you should know the cost of not deducting and depositing WHT.
  • Unpaid taxes and payable plus the cost of not paying them to the government treasury is worrisome.
    • Recovery may be made from withholding agent
    • Dis-allowance of expenses
    • Default surcharge
    • Penalty

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