Pakistan: FBR publishes proposed criteria for listed companies to take advantage of reduced rate

Posted on Updated on

The Federal Board of Revenue (FBR) on 27 December 2016, published proposed criteria for listed Shari’ah-compliant companies to be eligible for a reduction of 2% of the income tax rate. These criteria provided in sub-clause (a) of clause (18B) of the Second Schedule to the Income Tax Ordinance 2001 (vide SRO 1173(I)/2016). The FBR proposes to introduce new Rule 231H reduced rate of tax for Shari’ah-compliant companies to the Income Tax Rules 2006.

The proposed criteria are as follows:

(i) the business of a company must be Halal;

(ii) Riba-free financing must be shown on a company’s balance sheet; however, the company may be leveraged through Islamic modes of financing obtained from licensed Islamic financial institutions;

(iii) all investments made by a company must be 100% Shari’ah compliant; and

(iv) at least 30% of a company’s issued shares must be publicly traded.

The draft proposal will be taken into consideration by the FBR after 7 days of its publication in the Official Gazette.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s