The government has made several amendments to the income tax law to make it easier for overseas Pakistanis to open Roshan Digital Accounts.
It has taken the initiative after feedback from Pakistanis living abroad and the central bank.
Overseas Pakistanis investing in Naya Pakistan Certificates through their Roshan Digital Accounts were already under the full and final taxation regime.
The amendments have now extended the coverage of full and final taxation regime to dividends and capital gains on shares and mutual fund investments. They include capital gain (profit on sale) on real estate too.
“The simplification of the taxation regime is likely to give a further boost to the Roshan Digital Accounts scheme,” the State Bank said.
Following the amendments, overseas Pakistanis won’t need to file tax returns for their income from investments made through Roshan Digital Accounts.
They won’t face penalties or doubling of tax rate due to their absence from the Active Taxpayer’s List (ATPL). Overseas Pakistanis will not be subject to tax on cash withdrawals and bank transfers that are applicable to non-filers.
While profit on debt on Roshan Digital Account deposits is tax exempt, the tax rate on profit on NPCs is 10% for both overseas and resident Pakistanis who have declared their assets abroad. It is 15% percent on dividends received from mutual funds and companies, except Independent Power Producers and tax-exempt companies, which are taxed at 7.5% and 25% respectively.
The capital gain on shares and mutual funds is also taxed at 15%, the same rate that applies to filers. In addition, a tax of 1% of the value of the purchase or sale will be payable by overseas Pakistanis both at the time of purchase and sale of real estate, which will be the full and final discharge of tax liability against capital gain on real estate investments made through Roshan Digital Accounts.
“Looking ahead, the State Bank will continue its efforts towards making the policy, regulatory, business and taxation environment around RDA investor-friendly,” it said.
