The latest Finance Act 2015 has slapped regressive duties on the country’s business community, as an 8% tax liability on services companies has been imposed by the government.
It is now to be the minimum tax liability on a services company, to be paid regardless of whether the company makes a loss or profit.
The new regime is devastating to services companies operating at razor thin margins, such as Information Technology firms dealing in Business process outsourcing and third-party agents.
The new tax does not even spare technology-based start-ups, which usually don’t report any profits in the first five years.
Such kinds of minimum or revenue-based taxes are not practised in any of the leading marketplaces in the world or emerging investment destinations, according to Abacus Consulting Partner and one of the most respected executives in Pakistan’s service industry Abbas Khan.
