Foreign currency deals during 2021, 2022: FBR to impose 40pc additional tax on windfall profits of banks

ISLAMABAD: The Federal Board of Revenue (FBR) will shortly issue a statutory regulatory order (SRO) to impose 40 percent additional tax on windfall profits of banks arising from foreign currency deals during 2021 and 2022.

The FBR’s SRO will explain the mechanism of collection of tax, time period of collection, declaration and recovery from the banks.

“The notification will soon be issued by the FBR,” sources said.

Finance Act, 2023 has introduced a new Section 99D which will provide for imposition of additional tax on windfall income profits and gains of any person being a company.

According to the Section 99D “Additional tax on certain income, profits and gains) of the Finance Act, 2023, notwithstanding anything contained in the Income Tax Ordinance or any other law for the time being in force, for any of the last three tax years preceding the tax year 2023 and onwards, in addition to any tax charged or chargeable, paid or payable under any of the provisions of this Ordinance, an additional tax shall be imposed on every person being a company who has any income, profit or gains that have arisen due to any economic factor or factors that resulted in windfall income, profits or gains.”

The federal government may, by notification in the official gazette, – (a) specify sector or sectors, for which this section applies; (b) determine windfall income, profits or gains and economic factor or factors including but not limited to international price fluctuation having bearing on any commodity price in Pakistan or any sector of the economy or difference in income, profit or gains on account of foreign currency fluctuation; (c) provide the rate not exceeding fifty percent of such income, profits or gains; (d) provide for the scope, time and payment of tax payable under this section in such manner and with such conditions as may be specified in the notification; and (e) exempt any person or classes of persons, any income or classes of income from the application of this section, subject to any conditions as may be specified in the notification.

Copyright Business Recorder, 2023