Regulatory Alerts2014-04-08
Added · Updated
BRPD Circular Letter No. 08: Deduction of Income Tax at Source on Mobile Banking Service Charges/Commissions/Fees/Revenue Share under Section 52AA of The Income Tax Ordinance, 1984
The National Board of Revenue mandates that sponsoring banks and mobile network operators deduct income tax at source at a rate of 10% on charges, commissions, fees, or revenue shares paid to mobile network operators, technical service providers, and service delivery agents in connection with mobile banking operations. This requirement applies to payments made under bilateral agreements or separate contracts for network usage, technical support, and service delivery. An exemption from withholding tax is granted if costs are reimbursed at cost without profit markup to a third party, and another exemption applies to 'Information Technology Services' provided by eligible entities until June 30, 2015.
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