PBA recommends FBR not to impose any additional tax on banking sector

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Chief Executive Officer, Pakistan Banks Association, Tawfiq Hussain, said the banking sector is playing a vital role in the economic development of the country and is supporting major initiatives of the government, the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP).

It also plays a pivotal role, as Executing Agents, in supporting the government and SBP’s interventions to respond to challenges like the Covid 19 Pandemic. It is also one of the largest contributors to the national exchequer and should therefore be treated equitably.

He said that for the year ended Dec 31, 2021, the banking sector paid total taxes of about Rs.178 bn to the national exchequer. The sector collected and paid to the FBR, withholding tax of over Rs.162 bn. In 2021, the total contribution to the national exchequer from the members of PBA was over Rs.340 bn.

Regarding business income of the corporate sector, the PBA CEO said the government had taken a very positive step by progressively reducing its income tax rates, starting from 35% to 34% for tax year 2014 and to 29% for tax year 2019 onwards.

PBA believes that in order to provide a level playing field, banks should also be taxed at a uniform tax rate of 29%, as was applicable to other sectors of the economy.

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