Pakistan Banks’ Association (PBA) on Tuesday asked Finance Minister Shaukat Tarin to amend the Finance Bill 2021 to withdraw 4 percent “Super Tax” applicable on banks through the amended Finance Bill 2021.
Ministry of Finance has been informed by the banking industry here on Tuesday that, “The imposition of the highest tax rate of 35 percent for the banking sector viz-a-viz the corporate sector of 29% and continuation of the super tax rate of 4 percent only on banks will, we believe, not send a positive signal to banks’ local and foreign investors/sponsors, in terms of equitable tax treatment for all sectors of the economy.”
The banking industry has requested to bring down the bank’s tax rate to 29percent, as is applicable for the other sectors of the economy. It is also requested that super tax at 4 percent for banks, being discriminatory, be abolished.
The banking sector, which paid total taxes of Rs. 156 billion for the year ended December 2020 and which collected and paid to FBR, the year ended December 2020, with the total contribution to the withholding tax of Rs. 194 billion for the year ended December 2020, with a total contribution to the exchequer of Rs. 350 billion, with continue to support the government efforts for a strong, growing and vibrant economy.
The banking sector has proposed that “Profit on Debt” be taxed at 15 percent, i.e. at the same rate as for return on investment in shares or units of mutual funds.
The PBA is, therefore, extremely disappointed that not only has our proposal to reduce the tax rate on Profit on Debt to 15 percent been completely disregarded but the annual profit limit of Rs.36 million has been significantly reduced to Rs.5 million, at which such profit would be taxed under the head ” income from other sources”, which can be as high as 35 percent, PBA added.