FBR is contemplating applying Super Tax on progressive tax basis in 2024-25 budget 

Presently the corporate sector is paying over 50pc tax to the govt 

ISLAMABAD: The Federal Board of Revenue is considering applying Super Tax on progressive tax basis instead of application of a certain percentage on the entire income in next year’s budget 2024-25.

Sources in the FBR told this scribe that the corporate sector has proposed to fix specified timelines for the applicability of super tax arguing that mere levy of super tax without any specific timeline is simply an increase in the corporate tax rate from the current 29%. 

In its tax proposals, the corporate sector proposed that it has become difficult for businesses to absorb an additional levy of super tax for an indefinite period with the recent unprecedented depreciation of the Pakistani Rupee, import constraints and an increase in interest costs.

Currently the corporate sector is paying over 50% tax to the government of Pakistan. The collection has a breakdown of 35% of Individual and Association of Person’s (AOP) , 4% additional Super Tax for tax year 2022, 29% in corporate profits, 15% in dividends, 17% GST, along with an additional up to 4% additional Super Tax for Tax Year 2022.

Sources also said that FBR’s field offices are knowingly sending notices to recover Super Tax to companies that do not have any taxable income and are already suffering taxable losses for the year.

Sources disagreed, arguing that rather tax authorities are deceitfully computing the imputable income based on the amounts separately and clearly mentioned as subject to minimum tax, which confirms the malafide intentions of Tax Authorities.

It is pertinent to note that the government has imposed Super Tax on documented sectors retrospectively, through the Finance Act, 2022. This is a penalty on the well organized documented sector that creates jobs and disposable incomes for millions and also generates substantial tax revenues for the country. 

Under Section 4C, super tax is not progressive in nature and is applied on the entire profit once a threshold is crossed.  This is contrary to the concept of marginal tax rates under the progressive basis of computing tax liabilities.

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