KARACHI: Sindh has unveiled its sales tax rates applicable to foreign payments processed by various service providers through banking channels.
The Sindh Revenue Board (SRB), responsible for tax collection on behalf of the Sindh government, has introduced regulations governing the taxation of specific services. These regulations pertain to payments made by recipients located in the Province of Sindh to service providers based outside Pakistan through authorized collection agents.
The SRB defines the collection agent as either a scheduled bank or any other entity authorized by the State Bank of Pakistan (SBP) to facilitate international money transfers for the specified services.
Under the new regulations, the collection agent will be responsible for imposing and collecting sales tax from recipients of the specified services within the Province of Sindh at the applicable tax rates.
For advertisement services where payments are channeled through a collection agent using any means for transferring funds to non-resident service providers, a 13 percent sales tax has been instituted.
Additionally, a three percent sales tax has been introduced for services offered by software or IT-based system development consultants, as specified in clause 84B of Section 2 of the Sindh Sales Tax Act. This tax also encompasses cloud-based content streaming services when payments are made through a collection agent for non-resident service providers.
The SRB has clarified that the collection agent will calculate and collect sales tax based on the gross value of the specified services. This gross value corresponds to the consideration amount for the service being remitted abroad by the collection agent on behalf of the recipient of the service in Sindh. The new regulations are applicable from October 1, 2023.
