Retailers and freelancers complain about taxes on digital
ISLAMABAD: The Chainstore Association of Pakistan (CAP) and more than 100 companies and independent contractors have voiced serious concerns about the growing limitations and levies on payments for overseas digital services made through banking channels, such as debit and credit cards and commercial remittances.
Additionally, the Federal Board of Revenue (FBR) increased withholding tax (WHT) for active taxpayers using debit and credit cards for foreign transactions by 400%, from 1% to 5%. According to a joint statement released on Saturday, “While this tax may be adjustable at the time of annual tax return filing, it temporarily increases the cost per transaction and funding requirements to make payments for commercial purposes.”
The same goes for the 16% federal excise duty (FED) on bank fees, which raises the price of such transactions.
The State Bank of Pakistan (SBP) and the FBR recently took efforts, according to the trade group representing organized merchants, to limit the outflow of foreign currency.
However, it noted that thousands of independent contractors, companies, and startups in Pakistan rely heavily on foreign digital services and platforms for their various commercial endeavors and make money abroad through social media marketing, search engine advertising, domain registration, and website hosting.
Depending on the type of service, payments for such services may be made frequently throughout the month or only once a year.
The LCCI president stressed in a letter to the leaders of trade and industrial organisations how crucial it is for Pakistan’s economy to expand the tax base. The management of the nation’s affairs, from defense to development to security to social welfare, depends on a healthy tax to GDP ratio. Anwar emphasized the value of upholding precise and transparent documentation, warning that failing to report assets.
Published in EDP BLOGS on August 27,2023.
