Tax Overview and Recommendations

5 Other Taxes Customs duty Excise duty Stamp duty Property tax Inheritance / gift tax Capital value tax Professional tax Goods imported into Pakistan are liable to customs duties at the prescribed rates. However, zero-rating and concessionary rates of customs duty are generally applicable for industrial raw materials, semi-finished goods and capital goods (particularly if these are not being manufactured in Pakistan), machinery for power projects, oil and gas projects etc. Federal Excise Duty (FED) is levied on specific goods imported or manufactured. Specified services provided and rendered in Pakistan are also taxable at prescribed rates. Generally, FED is charged on the value or retail price basis. Provincial Sales Tax is applicable on specified services in the provinces. Items subject to FED include (amongst others); edible oils, aerated waters and concentrates, tobacco and cigarettes, cement, transportation vehicles, etc. Stamp duty is imposed on instruments and documents as are mentioned in Schedule appended to the Stamp Act, 1899. Stamp duty is a provincial levy which is payable on every instrument executed, drawn or presented in Pakistan as listed in the said Schedule at such rates given against each item. For instruments executed outside Pakistan chargeable to stamp duty under this Act, the instrument must be stamped with stamp duty within 3 months after it is first received in Pakistan. There is a provincial tax levied on the value of property, with the rates varying between provinces. There is no inheritance or gift tax in Pakistan. Capital Value Tax (CVT) is charged on the purchase of Modaraba certificates, registered instruments of redeemable capital including shares of listed companies and specified immoveable property. CVT is a tax on the capital value of specified assets and is payable on the acquisition of such asset by every individual, association of persons, firm or company. The rate of CVT is 0.02 percent of the purchase value of the Modaraba certificates and instrument of redeemable capital and 0.01 percent on shares of listed companies. The CVT rates vary for the real estate sector depending on the nature and location of the property. Professional tax is a provincial levy on trade, professions, callings and employment generally payable on the basis of paid-up capital. The rates differ between provinces. KPMG 11 © 2016 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. All rights reserved.

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