The Federal Board of Revenue (FBR) of Pakistan is considering a major overhaul of the sales tax system for the fiscal year 2024-25. The proposal aims to extend the standard 18% sales tax to a wide range of goods currently either zero-rated or exempted, including agricultural products, dairy items, and educational supplies. This change could significantly impact local supply chains by removing many existing tax exemptions.
The proposal is still pending government approval. Certain exemptions, especially in the health sector and for foreign investments like Chinese infrastructure projects, are expected to remain. The FBR is also contemplating either retaining the zero-percent tax for some items or applying a reduced tax rate, though the preference seems to be towards the standard rate.
Items potentially affected by this change include fertilizers, tractors, petroleum crude oil, pesticides, and iodized salt sold under brand names. Additionally, the tax-exempt status of LNG used by fertilizer manufacturers and various imports for privileged entities and special economic zones may also be revised. However, exemptions for diplomats, United Nations agencies, and raw materials for manufacturing within Export Processing Zones might be preserved.
This comprehensive tax reform aims to increase national revenue and adjust to the global economic environment, though its implementation will depend on governmental ratification.
Source: pkrevenue.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
