ISLAMABAD: The Federal Board of Revenue (FBR) has decided to waive the withholding tax levied on the withdrawal of remittances sent home by overseas Pakistanis. As per the decision, the overseas Pakistanis sending money through the banking channels will no longer have to pay additional taxes.
For the purpose, the FBR has started framing a new policy for waiving the withholding tax applicable on the withdrawal of remittances from banks sent by the overseas family members of non-filers of tax returns. According to FBR officials, the departments concerned have been requested to give recommendations on the new policy, the draft of which will be ready by next week.
Currently, the tax return filers pay 0.3% withholding tax while non-filers pay 0.6% tax on the withdrawal of money from banks. According to sources, the PM Office, in a letter, has directed the FBR to review the existing policy regarding the withholding tax on the withdrawal of money sent by overseas Pakistanis.
As per the letter, the FBR has to formulate a policy within days and send it to the prime minister as overseas Pakistanis have reported difficulties in the transfer of remittances from the banking channels. Banks cut additional taxes when remittances are withdrawn by the recipient family members as they generally have no taxable income of their own and hence do not file tax returns.
In addition to that, the exchange rate at which banks make the payments for remittances is generally lower than the market rate, causing a loss to the recipients. According to documents available with The Express Tribune, the prime minister, in a January 11 letter to the FBR, took notice of the problem and directed the authorities to resolve the issue within 21 days through a comprehensive strategy.
Published in The Express Tribune, January 18th, 2019.