The Pakistan Income Tax Ordinance 2001 (ITO) was amended by Finance Act 2012 to consolidate all withholding tax provisions regarding non-residents. The Pakistan Federal Board of Revenue (FBR) issued Circular No. 1(31)/WHT/2012 dated 16 November 2012 providing the following clarifications regarding the application of the provision:

The following transactions are liable to tax at separate rates under separate sections: 

–          payment of royalty or fees for technical services,

–          contracts of construction,

–          assembly or installation projects or supervisory services in relation to such projects,

–          payment of an insurance premium or reinsurance premium,

–          Payment for advertisement services to a media person relaying from outside Pakistan and payment for the sale of goods or rendering of services.

For transactions that are not covered above, tax should be deducted as per rates provided under Division II of the Part II of the First Schedule of the ITA.

However, there are also certain exclusions including taxes to be withheld under other provisions of the ITO such as those relating to salary, dividends, profit on debt, and income from property, prizes, winnings and brokerage and commission.