Pakistan Reduces Tax and Offers Amensty

April 6, 2018 Taxation in Pakistan

pakistan tax amnestyISLAMABAD – Pakistan is trying to bring people into the tax net, however, it is simultaneously reducing tax rates, boosting tax-free thresholds, and offering a tax amnesty.

On April 5th the government of Pakistan announced a series of sweeping changes aimed at cutting down on tax evasion and boosting tax revenues in the country.

The three most popular points of the plan are the launch of an amnesty program, the overhaul of tax rates for individuals, and the announcement that individuals’ Computerized National Identity Card will now act as their National Tax Number.

The use of national IDs as the National Tax Number is expected to help bring more people into the tax net and ensure a wider range of compliance with filing and payment requirements.

The new amnesty will allow taxpayers who are not politically exposed persons to come forward and provide details on their undeclared incomes, cash, and foreign holdings.

The penalty rates for the undeclared assets is 5 percent for local liquid assets, 2 percent for foreign cash, and 3 percent for foreign-held assets.

Personal tax rates will also be amended and updated, with all incomes up to PKR 1.2 million being tax exempt, with incomes up to PKR 2.4 million being levied at 5 percent, with 10 percent applying for incomes up to PKR 4.8 million, and 15 percent on all those above PKR 4.8 million.