Emerging Markets Rates and Currencies Handbook

Tax Summary – Pakistan Pakistan Country Tax Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities W/H Tax • 20% WHT on payment of profit on debt to a non- resident person in terms of section 152(2) • 10% reduced rate applies under Clause (5A), Part II of the Second Schedule to the Ordinance where payment is made to a non-resident person not having a permanent establishment in Pakistan. Under certain tax treaties can be reduced. • 15%WHT in case of persons appearing on the ATL • 30%WHT in case of persons not appearing on the ATL • Profit on debt paid, which is covered under clauses (78) and (79) of Part I of the Second Schedule, the WHT rate will be 0% (Refer clause 5AC, Part II of the Second Schedule. • In case of payment of profit on debt to a banking company, no WHT applies in terms of Rule 5(2) of the Seventh Schedule to the Ordinance • N/A • WHT on Dividend 15% (in case of persons appearing on the ATL) and 30% (if not appearing on the ATL). • Where dividend is paid by an Independent Power Purchaser and where such tax on dividend is a pass through item, rate of WHT is 7.5% (in case of persons appearing on the ATL) and 15% (if not appearing on the ATL). • In case of a person receiving dividend from a company where no tax is payable by such company, due to exemption of income or carry forward of business losses under Part VIII of Chapter III or claim of • tax credits under Part X of Chapter III, rate of WHT is 25% (in case of persons appearing on the ATL) and 50% (in case of persons not appearing on the ATL). • In case of dividend declared by a company as are “attributable” to profits • and gains derived from a bagasse and biomass-based co- • generation power project qualifying