The Government has imposed yet another tax, but the new tax isn’t targeted towards the IT sector but the education sector. The government has issued a 5% Withholding Tax (WHT) on all educational expenses for foreign education. The tax was introduced in the Finance Bill 2015. The tax applies to any Pakistani looking to send money overseas for the purposes of education i.e. fees, living expenses, etc.
The new tax imposed by the Government will now charge all remittances a 5% WHT dealing with any finances being sent abroad for educational expenses. The tax will be applicable on the following educational expenses: boarding and living expenses, paying for distant learning to an institute abroad, any expense related to foreign education and tuition fee.
The tax will be collected by any and all financial institutions that participate in the remittance process, these include, banks and other financial bodies that will help send the money abroad. Though, the tax is adjustable to the senders income as well.
The government has also set a limit on the amount being sent abroad. Outbound remittances are limited to $70,000 for tuition expenses and $5,000 for living expenses as the upper limits per annum. The stated amount also applies to all other currencies as an upper limit. This means the upper limit isn’t only on the USD, but also the Euro, Pound, etc., to the equivalent sum of $70,000 and $5,000.
Tax experts have stated that the government should also consider amending section 111(4) of the Income Tax Ordinance to help identify the person sending the money from Pakistan. This should be done in order to prevent black money generation, they believe that the system can be exploited for money laundering purposes.
What are your thoughts on the recent spree of taxes? Let us know in the comments section below.
Source: The News