The Federal Board of Revenue (FBR) in Pakistan allows eligible taxpayers to apply for a reduced withholding tax rate on the import of raw materials. This process can be completed online through the IRIS system.
Key Steps:
- File a Single Application: Submit a single application titled “(Application u/s 159(1) / 148 for reduced rate of withholding tax on Import) (FOR QUOTA ALLOCATION)” for the entire year.
- Provide Import Details: Indicate your annual requirement of raw materials, including HS Codes, quantities consumed in the previous year, and estimated quantities for the current year (up to 110% of the previous year’s consumption).
- Avoid Redundant Information: Do not include additional import details like LC numbers, LC dates, or LC values in this initial application.
- Review Import History: The system will display your previous year’s raw material import history under the “Import History” tab.
- Obtain Commissioner’s Approval: The Commissioner IR will review your application and, if eligible, grant approval for importing the specified HS Codes and quantities at a reduced withholding tax rate.
- File Subsequent Applications: If you need to import additional raw materials not included in the initial application, file separate applications using the same format.
- Avoid Duplicate HS Codes: Do not repeat HS Codes in subsequent applications if they were already included in the initial application.
Benefits of Reduced Withholding Tax:
- Cost Savings: A reduced withholding tax rate can lower your overall import costs.
- Improved Cash Flow: Reduced tax payments can improve your cash flow and working capital.
- Enhanced Competitiveness: Lower import costs can make your products more competitive in the market.
Important Considerations:
- Accurate Information: Ensure that the information provided in your application is accurate and complete.
- Timely Submission: Submit your application within the specified timeframe to avoid delays.
- Consult with Tax Professionals: If you have any questions or require assistance, consult with a tax professional.
In Nutshell:
By following these steps and providing accurate information, you can successfully apply for a reduced withholding tax rate on raw material imports in Pakistan. This can help you optimize your business operations and improve your bottom line.
