The federal government has decided to increase the Withholding Tax (WHT) on international credit card transactions from 1 percent to 5 percent in the fiscal year budget 2023-24, while the WHT on non-ATL will be increased from the current 2 percent to 10 percent.
The government has also proposed to increase the rate on the fee for off-sure digital services from 10 percent to 15 percent under section 152(1C) of the said Ordinance.
In his budget address today, Finance Minister Ishaq Dar stated that increasing foreign exchange reserves and remove loopholes impeding progress in this regard.
For this purpose, Dar said the government has decided to discourage foreign currency outflow through banking channels and credit/debit cards by increasing WHT on such transactions to 5 percent.
Pertinently, this step aims at encouraging the general public to use documented banking channels, which are generally more secure, to fulfill their genuine foreign exchange needs while at the same avoiding loopholes that impede forex growth.
Again, a great a great initiative to discourage people from wasting countries reserves on things that we could live without.
The increase in tax on off-shore digital services is also a good decision, I will have to use Google Cloud, or Icloud, but this tax should help offset my spending usd, I so hope that someday the govt will give a tax free initiative, and add privacy laws (which see impossible right now) to cloud services to host data in Pakistan.
If you don’t need any digital services then it’s waste of money but majority of freelancers/online businesses have to depend on these digital services like hosting, domains, cloud servers, this is indirect taxing on freelancers/Online businesses. Highly disappointed. You have to stop dollar smuggling not discourage people already using banking channels. This will result in these people keeping their money abroad rather than bringing it back home. If they really wanted to do it they should have introduced a threshold.
Yeah, just came to know about this when I had to pay the bills for my services. I am a freelancer myself and this is very disappointing that I have to pay this many taxes on my CC bills for services even after bringing in so many dollars every month.
There are no real benefits of being a filer here. Govt. here is like we are going to rob you irrespective of you being a filer or not, but if you are a filer you will be robbed with a bit less % of tax.
Now I am thinking of opening bank accounts overseas or even UAE is better and parking all my dollar earnings there and start spending from there. I will happily bring in 500 dollars every month which is enough for groceries each month. This govt does not deserve my dollars.
I thought this government (and Dar) was stupid. Now I believe it is totally insane.