KARACHI: The Federal Board of Revenue (FBR) has stopped its officials from freezing bank accounts for non-compliance of companies engaged in projects related to China-Pakistan Economic Corridor (CPEC).
According to an official, the board has instructed all the tax departments not to invoke provisions related to bank attachment in the cases of those companies making transactions under CPEC projects.
There are serious problems in the monitoring of the withholding tax, as most of the projects have been exempted the by the government.
The official said the exemption from withholding tax is only granted through the issuance of certificate or those exempted through the Income Tax Ordinance, 2001. The tax offices have conducted monitoring of withholding taxes under Section 152 and 153 (1) of Income Tax Ordinance, 2001.
According to Section 152, every person paying an amount of royalty or fees for technical services to a non-resident person that is chargeable to tax would deduct tax from the gross amount paid at seven percent of the gross amount in case a person is a filer and 13 percent in case the person is a non-filer, the official said.
Similarly, Section 153(1) explains payments for goods, services and contracts by permanent establishment of non-resident companies. The official said normally the tax offices take recovery action through attachment of bank account in the case of the tax collected by the withholding agent, but not deposited in the national exchequer.
