The Federal Board of Revenue (FBR) has published Circular No. 04 dated September 06, 2017 to explain the important changes made to Income Tax Ordinance, 2001 through Finance Act, 2017. The main changes include:
- A new concept of ‘Startup Business’ has been introduced under Section 2(62A) in order to promote and encourage innovation and entrepreneurship in Pakistan, particularly in the field of Information Technology;
- Prior to the Finance Act, 2017 the term “Liaison Office” was not defined in the Income Tax Ordinance (ITO), 2001. A “Liaison office” is now defined in section 2(30C) of the ITO;
- The extension of the super tax for the 2017 tax year at a rate of 3% for every person (other than a banking company) with income of PKR 500 million or more and 4% for every banking company has also been introduced;
- A new concept of tax on undistributed profits has been introduced for the tax year 2017 and onwards; and
- The FBR has also introduced a conditional fixed tax regime for builders and developers for the tax year 2017.
