Unleash Industrial Growth & Tax Savings: Your Guide to Pakistan’s Section 65E
For Pakistani companies established before 2011, a powerful tax advantage lies dormant in Section 65E. This guide unlocks its potential, empowering you to claim significant tax savings and fuel industrial growth.
Who can claim?
- Companies established in Pakistan before July 1st, 2011
What investments qualify?
- Expanding existing operations with new plant and machinery
- Launching new industrial projects, including corporate dairy farming
Key requirements:
- 70% minimum: At least 70% of the investment must come from freshly issued shares (new equity)
- Timing is key: Investment and installation must occur between July 1st, 2011, and June 30th, 2021
Benefits: 5 years of tax bonanza!
- Claim a tax credit equal to one-tenth (or a formula-based amount) of the tax attributable to your expansion/new project
- Enjoy this credit for 5 full years from project setup or commercial production, whichever comes later
- Applies to all taxes, including minimum and final taxes
Two calculation methods:
- Separate accounts: If you maintain separate accounts for the project, use the one-tenth rule.
- Proportional credit: For other cases, the credit is proportional to the new equity injected compared to total equity.
Claiming your credit:
- File your income tax return, specifying your claim under Section 65E.
- Prepare all documentation related to the investment and new equity.
Important note: Misusing the credit (e.g., discontinuing the business within five years) can lead to penalties and tax recomputations.
Empowering growth through Section 65E:
- Reduce your tax burden: Free up resources for expansion, modernization, and increased profitability.
- Attract new investors: Showcase your financial strength and growth potential.
- Boost Pakistan’s industrial landscape: Create jobs, bolster production, and contribute to national development.
Seek professional guidance:
The complexities of Section 65E make consulting a qualified tax advisor crucial. They can help you navigate the requirements, maximize your benefits, and ensure compliance.
Don’t miss this valuable opportunity to unlock your tax savings and fuel industrial growth. Explore Section 65E and unleash its potential for your business and Pakistan’s economic dynamism!
