I never bother with the FBR exemption certificate for tax year 20-21. Last tax year 21-22 FBR quashed the tax credit regime for IT exports. Now 1% is final tax for exports, or 0.25% if registered with PSEB and submitted PSEB certificate to your bank.
From Income Tax Ordinance:
154A. Export of Services.— (1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –
(a) exports of computer software or IT services or IT enabled services [where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).];
(b) services or technical services rendered outside Pakistan or exported from Pakistan;
(c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;
(d) construction contracts executed outside Pakistan
(da) foreign commission due to an indenting commission agent;]
(e) other services rendered outside Pakistan as notified by the Board from time to time;
(2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –
(a) return has been filed;
[(b) withholding tax statements for the relevant tax year have been filed if required under the Ordinance;] and
(b) sales tax returns under Federal or Provincial laws have been filed, if required under the law;
(d) no credit for foreign taxes paid shall be allowed
(3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation: Provided that the option shall be exercised every year at the time of filing of return under section 114.
(5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.
(6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.
Division IVA
Exports of Services
The rate of tax to be deducted under section 154A shall be:-
- Export proceeds of Computer software or IT services or IT Enabled services by persons registered with Pakistan Software Export Board: 0.25% of proceeds.
- Any other case: 1% of proceeds.
