KARACHI: Federal Board of Revenue (FBR) has imposed a 25 percent tax on the return on investments in Islamic bonds or sukuks by corporate entities.
A new Section 5AA was introduced into the Income Tax Ordinance, 2001 for taxing the return on sukuk investments by corporations, individuals and association of persons (AOPs).
It said that the tax imposed on a person who receives a return on investment in sukuks shall be computed by applying the relevant rate of tax to the gross amount of the return on investment in sukuks.
The rate of tax imposed under section 5AA on return on investment in sukuks received from a special purpose vehicle shall be –
(a) 15 percent in the case the sukuk-holder is a company;
(b) 12.5 percent in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million; and
(c) 10 percent in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.
Another Section 150A has been inserted to Income Tax Ordinance, 2001 for deduction of tax by special purpose vehicle. It said that every special purpose vehicle making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate given below:
(a) 15 percent in case the sukuk-holder is a company;
(b) 12.5 percent in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million;
(c) 10 percent in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million; and
(d) 17.5 percent in case the sukuk-holder is a non-filer.
