Tax Free Living in Pakistan

[yazdi]

Re: Tax Free Living in Pakistan

@Sa1eem

Brother, it seems you are right that apart of import duty, Pakistan deduct withholding tax on imports (probably in the name of sales tax).

Anyhow, withholding tax is not necessarily income tax. It could be any tax that government considers could arise for various reasons that government deducts in advance, so that it can be adjusted by tax payer later.

I do not know on what category withholding tax could fall if it is imposed on imports. Most likely if withholding tax is imposed on imports than that must be part of sales tax that importers importing could adjust later. On the other hand, I believe that if import is not of commercial nature than imports must be free from such taxes and only import duty must be levied.

Your post shows your ignorance on the subject. Withholding tax is always income tax pre paid, on assumption of future profit at a fixed rate on the value of transaction without considering the actual profit. This with holding tax may or may not be final discharge of Income tax liability.

Sales Tax at import is totally a separate tax, nothing to do with withholding tax.

I bet you have never imported anything in Pakistan. Let me tell you how it is computed. The first tax levied on import is the custom duty which is computed on CNF value of the goods. Then Sales tax is levied, on CNF + Custom duty paid value. Finally Income tax is levied on CNF + Custom Duty + Sales Tax Value… This income tax is the minimum tax liability for a commercial importer. In case of a manufacturer this income tax is adjustable towards total income tax liability… In the same way as Sales tax paid is adjustable towards total Sales tax liability… Similar to the VAT system in UK..

In addition to imports, withholding tax/Income tax is also deducted on local supplies, services, consultancy fees, dividends, salaries, cash withdrawals from the banks, export proceeds etc etc.