ISLAMABAD: Finance Minister Ishaq Dar on Saturday offered two options to services sector operators: pay minimum tax at the rate of 8 per cent of the gross turnover or present their accounts for audit and give an undertaking to pay 2pc tax.
These decisions will come into force from November 1, 2015.
The minister was chairing a meeting of the representatives of the 12 service sectors and announced that they will have to choose one of the two options to complete their tax liability.
As per the decisions those who want to opt out of minimum tax under the Income Tax Ordinance 2001 and present their accounts for audit by giving an irrevocable undertaking in writing by the date specified by the government for tax year 2016, will have to pay tax not less than 2pc of the gross turnover.
As part of the second option, to pay minimum tax at the rate of 8pc of the gross turnover and entitled to carry forward this minimum tax if it exceeds the actual tax payable after assessment. However, the unadjusted amount of tax shall be carried forward and adjusted against tax liability of subsequent years up to a maximum of five years.
The 12 corporate service sectors which will avail the facility include freight forwarding services(sea); Air Cargo services (air freight); Courier services; manpower outsourcing services; hotel services; security guard services; software services; tracking services; advertising services; share registrar services; engineering services; and car rental services.
The minister also constituted a five-member committee to review taxation under section 153(1)(b) of the Income Tax Ordinance 2001. The committee would be headed by Haroon Akhtar Khan, special adviser to the prime minister on revenue.
The gist of the representation of nearly all the aggrieved sectors was that they operate on very low margin of profit and 8pc minimum tax cannot be absorbed by them. The committee after having discussions with the representatives of the corporate service sectors submitted its report to the finance minister.
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— The Daily Mail - People's Daily