Pakistan Proposed Changes To Attract Foreign Investors

Pakistan: Proposed Changes To Attract Foreign Investors

Pakistan Proposed Changes To Attract Foreign Investors

Major changes have been proposed in the recent Pakistan Budget for 2019 which may have an impact on foreign investors. In a bid to attract foreign direct investment into the country, the Government has launched an aggressive drive to cut-down the cost of doing business.

Key changes to impact corporates:

  • Option for a non-resident business entity to opt for the Final Tax Regime (FTR) stands withdrawn
  • The tax deductible from a non-resident is switched from the Normal Tax Regime (NTR) to Minimum Tax Regime (MTR) without any change in withholding tax rates
  • The tax on the offshore component of the non-residents under cohesive business operation is proposed to be reduced to 30% of the tax payable. The residential status for individuals has been redefined:
    o An individual stays in Pakistan for 183 days or more in a Tax Year; or
    o An individual would be considered a resident if he is present in Pakistan for a period of 90 days or more in the tax year and who, in the four years preceding the tax year, has been in Pakistan for a period of 365 days or more.
  • The basic exemption threshold for salaried taxpayers has been increased from PKR 400,000 to PKR 600,000

Full details on Pakistan’s 2019 Budget announcement can be read here.