ISLAMABAD: The Finance Bill 2022 is expected to introduce a new concept of tax, ie, ‘Windfall Levy’ in the Income Tax Ordinance, 2001 for special taxation of the potential sectors making extraordinary profits, but not depositing the due amount of taxes.
Sources told Business Recorder here on Saturday that the concept of the “Windfall Levy” does not exist in Pakistan.
This is for the first time that such kind of “Windfall Levy” would be introduced in the income tax law.
In this connection, the Federal Board of Revenue (FBR) may add a new section in the Income Tax Ordinance to issue the scope of the “Windfall Levy “in Pakistan.
Recently, the UK government had imposed a 25 percent windfall tax on the profits of the oil and gas firms. The levy would be placed on energy companies that were making “extraordinary profits” in the UK.
According to the sources, the rate of the “Windfall Levy “in Pakistan would not be high as 25 percent, but it could range between one percent to four percent because it would be charged on an annual basis. However, the rate has yet not been finalised by the FBR.
Sectors earning ‘windfall’ profits: FBR envisages ‘targeted’ taxation
The FBR will collect the “Windfall Levy” from sectors earning extraordinary profits during the last few years.
The “Windfall Levy” would be a separate tax and would be collected along with the income tax deposited every year.
The “Windfall Levy” would be collected on an annual basis at the time of payment of tax by potential sectors on the filing of income tax returns, the sources added.
Copyright Business Recorder, 2022