Additional Tax Exemptions for Certain Charitable Organizations in Pakistan

The Finance Bill 2022 has brought some good news for certain charitable organizations in Pakistan. The government has announced additional tax exemptions for these entities to encourage their contributions towards social welfare and development. In this article, we will discuss the newly eligible entities for tax exemption, as well as the organizations that are proposed to be extended unconditional tax exemption. We will also highlight other tax exemptions announced in the Finance Bill 2022.

Newly Eligible Entities for Tax Exemption

The Finance Bill 2022 has added clause 66 Table I to the Income Tax Ordinance 2001, which has made the following entities eligible for tax exemption:

1. The Pakistan Global Sukuk Programme Company Limited: This company is now exempt from paying taxes under the second schedule of the Income Tax Ordinance 2001.
2. Karandaaz Pakistan: From the tax year 2015 onwards, Karandaaz Pakistan is now eligible for tax exemption.
3. Public Private Partnership Authority: This authority is now exempt from paying taxes for tax year 2022 and the subsequent four tax years.
4. Hamdard Laboratories (Waqf) Pakistan: This charitable organization is also now eligible for tax exemption.

Proposed Extension of Unconditional Tax Exemption

Additionally, the Finance Bill 2022 proposes to extend unconditional tax exemption to the following organizations, subject to fulfilling the conditions specified in section 100C of the Income Tax Ordinance 2001:

1. Pakistan Mortgage Refinance Company Limited: This company was earlier entitled to tax exemption subject to fulfillment of certain conditions specified in the Income Tax Ordinance 2001. However, the proposed amendment would extend unconditional tax exemption to the company, as was earlier available to it prior to the Finance Act, 2020.
2. Pakistan Sweet Homes Angels and Fairies Place: This charitable organization is also proposed to be extended unconditional tax exemption.
3. Dawat-e-Islami Trust: This trust, which is engaged in various charitable activities, is also proposed to be extended unconditional tax exemption.

Other Tax Exemptions

Apart from the above-mentioned tax exemptions, the Finance Bill 2022 has also allocated tax exemptions to SIYAHKALEM construction and trade company (SECTCL) for any contract dated May 23, 2017, entered into with Earthquake Reconstruction and Rehabilitation Authority. Moreover, the construction of new cinemas till December 31, 2023, is also exempt in the new Finance Bill 2022.

Conclusion

The additional tax exemptions announced in the Finance Bill 2022 for certain charitable organizations are a welcome move by the government of Pakistan. These exemptions would encourage more organizations to participate in social welfare and development activities. It is important to note that while these tax exemptions can provide relief to eligible entities, it is equally important to ensure that the organizations continue to operate in compliance with relevant laws and regulations.