EY Ford Rhodes Chartered Accountants

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2 KHYBER PAKHTUNKHWA BUDGET BRIEFING 2017 This Memorandum is correct to the best of our knowledge and belief at the time of publication. It is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. The Firm and Ernst & Young do not accept any responsibility for any loss arising from any action taken or not taken by anyone using this publication. This Memorandum may be accessed on our website

3 This Memorandum has been prepared as a general guide for the benefit of our clients and is available to other interested persons upon request. This should not be published in any manner without the Firm s consent. This is not an exhaustive treatise as it sets out interpretation of only the significant amendments proposed by the Khyber Pakhtunkhwa Finance Bill, 2017 (the Bill) in the West Pakistan Urban Immovable Property Tax Act, 2958 (WPUIPTA 58), Khyber Pakhtunkhwa Finance Act, 1990 (KPFA 90) and the Khyber Pakhtunkhwa Finance Act, 2013 (KPFA 2013) in a concise form sufficient enough to amplify the important aspects of the changes proposed to be made. The Authority means the Khyber Pakhtunkhwa Revenue Authority and the Government means the Government of Khyber Pakhtunkhwa. The amendments proposed by the Bill after having been enacted as the Finance Act, 2017, shall, with or without modification, become effective on and from 01 July 2017, unless otherwise indicated. It is suggested that the text of the Bill and the relevant laws and notifications, where applicable, be referred to in considering the interpretation of any provision. Since these are only general comments, no decision on any issue be taken without further consideration and specific professional advice should be sought before any action is taken. Changes of consequential, administrative, procedural or editorial in nature have either been excluded from these comments or dealt with brevity. Contents Page Highlights I WEST PAKISTAN URBAN IMMOVBALE PROPERTY TAX ACT, 1958 (W.P ACT NO. V OF 1958) 2 KHYBER PAKHTUNKHWA FINANCE ACT, KHYBER PAKHTUNKHWA FINANCE ACT, ISLAMABAD: 09 June 2017

4 Highlights I WEST PAKISTAN URBAN IMMOVBALE PROPERTY TAX ACT, 1958 (W.P ACT NO. V OF 1958) Rate of taxes on residential and commercial properties are proposed to be enhanced for all categories. KHYBER PAKHTUNKHWA FINANCE ACT, 1990 Tax of professional tax of certain categories are proposed to be revised. New categories of taxpayers i.e. chemist, druggist, tailor etc. are proposed to be added in the ambit of Professional tax KHYBER PAKHTUNKHWA FINANCE ACT, 2013 The Bill seeks to add a service category Ride hailing services in the First Schedule to the KPFA 2013.

5 1 Table of Contents Section Page WEST PAKISTAN URBAN IMMOVBALE PROPERTY TAX ACT, , Schedule I and II 2 KHYBER PAKHTUNKHWA FINANCE ACT, , Appendix-II 3 KHYBER PAKHTUNKHWA FINANCE ACT, (47), First Schedule 5

6 2 WEST PAKISTAN URBAN IMMOVBALE PROPERTY TAX ACT, 1958 Change in the of tax Section 3 Schedule I and II The Bill seeks to increase the of the tax provided in Schedule I of the WBUIPTA 58. Comparison of the existing and proposed is given below Category Up to 5 marlas (other than self-occupied) Exceeding 5 Marlas but not exceeding 10 Marlas Exceeding 10 Marlas but not exceeding 15 Marlas Exceeding 15 Marlas but not exceeding 18 Marlas Exceeding 18 Marlas but not exceeding 20 Marlas Exceeding 20 Marlas but not exceeding 30 Marlas Exceeding 30 Marlas but not exceeding 40 Marlas 8 Exceeding 40 Marlas Comparison Schedule-I Rate of tax for areas of Provincial headquarter as notified by the Government (per annum) (Rs) Rate of tax at Divisional headquarters (per annum) (Rs) Rate of tax in suburban areas of Divisional Headquarters (per annum) Town Other than ships Town ships A B C Town Other than ships Town ships 1, ,500 1,300 1,100 1,300 1, ,700 1,600 1,500 1,600 1, ,500 2,400 2,200 2,400 2,200 1,400 1,100 2,200 2,100 2,000 2,100 2,000 1,100 1,000 3,300 3,100 3,000 3,100 3,000 1,600 1,500 3,300 3,200 3,000 3,200 3,000 1,700 1,500 4,800 4,700 4,500 4,700 4,500 2,500 2,300 10,000 9,000 8,000 9,000 8,000 5,000 3,000 15,000 13,500 12,000 13,500 12,000 7,500 4,500 15,000 14,000 12,000 14,000 10,000 8,000 6,000 22,500 21,000 18,000 21,000 15,000 12,000 9,000 20,000 18,000 16,000 18,000 16,000 14,000 12,000 30,000 27,000 24,000 27,000 24,000 21,000 18,000 30,000 25,000 20,000 25,000 20,000 15,000 12,000 45,000 37,500 30,000 37,500 30,000 22,500 18, Category Up to 5 marlas (other than self-occupied) Exceeding 5 Marlas but not exceeding 10 Marlas Exceeding 10 Marlas but not exceeding 15 Marlas Exceeding 15 Marlas but not exceeding 18 Marlas Exceeding 18 Marlas but not exceeding 20 Marlas Exceeding 20 Marlas but not exceeding 30 Marlas Exceeding 30 Marlas but not exceeding 40 Marlas 8 Exceeding 40 Marlas Comparison Rate of tax at District Headquarters (per annum) Rate of tax at District other than District Headquarters (per annum) Town Other than ships Town ships Rate of tax in Village not covered in other categories (per annum) Town ships/non- Townships Town ships Other than Town ships Category to be deleted ,200 1, Category to be deleted 1,100 1, ,600 1, Category to be deleted 1,700 1, ,500 2,300 1,300 1,000 Category to be deleted 4,000 2,000 1,500 1, ,000 3,000 2,250 1,500 Category to be deleted 5,000 3,000 3,000 2,000 1,000 7,500 4,500 4,500 3,000 Category to be deleted 10,000 8,000 6,000 4,000 2,000 15,000 12,000 9,000 6,000 Category to be deleted 10,000 8,000 6,000 4,000 3,000 15,000 12,000 9,000 6,000 Category to be deleted The Bill further seeks to increase the of the following categories of Schedule-II of the WBUIPTA 58. Rates Rates 7 15,000 and 7,500 22,500 and 11,250 7A 15,000 20,000

7 3 KHYBER PAKHTUNKHWA FINANCE ACT, 1990 Change in the of tax Section 7 Appendix II The Bill seeks to revise the of tax and add certain new categories in the Appendix-II as follows- 1 2 (i) All persons engaged in any profession, trade, calling or employment, other than those specifically mentioned hereinafter, in the Khyber Pakhtunkhwa Province, whose monthly income or earning (a) When exceeds Rs.3,000 but not exceeds Rs.10,000 Exempted with floor of Rs. 6,000 Exempted with floor of Rs. 3,000 (b) When exceeds Rs.10,000 but not exceeds Rs. 20, (c) When exceeds Rs.20,000 but not exceeds Rs. 50, (d) When exceeds Rs.50,000 but not exceeds Rs. 100, (e) When exceeds 800 Rs.100,000 but not exceeds Rs. 200,000 (f) When exceeds Rs.200,000 but not exceeds Rs. 500,000 1,000 (ii) Employees of Federal and Provincial Government Drawing pay in Basic Scales (a) BS 1 to 4 Exempted (b) BS 5 to (c) BS 13 to (d) BS (e) BS (f) BS 19 and 1,000 (g) BS 20 and above 2,000 All limited companies, Modarabas, Mutual Funds and Any other body corporate with paid up capital and reserves in the preceding year, whichever is more (a) When not exceeding Rs.10 million (b) When exceeding Rs.10 18,000 27,000 27,000 36,000 exceeding Rs. 25 million (c) When exceeding Rs. 25 exceeding Rs. 50 million 36,000 50,000 (d) When exceeding Rs. 50 exceeding Rs. 100 million 90,000 75,000 (e) When exceeding Rs ,000 95,000 exceeding Rs. 200 million (f) When exceeding Rs.200 million 100,000 Explanation provided at the end of serial 3 is proposed to be deleted which provides that The Paid-up-Capital in case of foreign banks shall be the minimum paid up capital as determined by the State Bank of Pakistan 3 Persons, other than companies, owing factories, commercial establishments, private education institutions and private hospitals, having the following commercial establishment (a) Any commercial establishment/factories having 10 or more employees which have not been otherwise explicitly given in this table 10,000 (b) Private clinics & hospitals having up to 10 employees 10,000 (c) Private clinics, hospitals having employees more than 10 but not more than 50 50,000 (d) Private clinics & hospitals having more than 50 employees 100,000 (e) Private Medical Colleges 100,000 (f) Private Engineering Institutes having degree programs 100,000 (g) Private Business Education Institute: (i) Having up to ,000 students (ii) Exceeding ,000 students (h) Private Law Colleges 100,000 (i) Private education institutions including professional and technical institutions other than specified at e, f, g & h charging monthly fee not exceeding Rs. 1,000 per student 5,000

8 4 (j) (k) (l) Private education institutions including professional and technical institutions other than specified at e, f, g & h charging monthly fee exceeding Rs. 1,000 but not exceeding Rs. 2,000 per student Private education institutions including professional and technical institutions other than specified at e, f, g & h charging monthly fee exceeding Rs. 2,000 but not exceeding Rs. 5,000 per student Private education institutions including professional and technical institutions other than specified at e, f, g & h charging monthly fee exceeding Rs. 5,000 per student 7,000 20, ,000 Holders of import or export license, assessed to income tax in the preceding year 4 with annual turnover (a) When not exceeding Rs. 4,000 50,000 (b) When exceeding Rs. 50,000 5,000 Clearing agents licensed or 10,000 5 approved as custom house agents Travel Agents (a) IATA travel agents 15,000 6 approved (b) Non-IATA approved 8,000 (c) Hajj and tour operator 15,000 7 Restaurants/Guest Houses 15,000 liable to sales tax 8 Professional Caterers 15,000 Wedding Halls/Lawns 30,000 9 (irrespective of their nomenclature) 10 Advertisement Agencies 10,000 Doctors (a) Specialists 20,000 (b) Non Specialists 2,000 10, including Medical Practitioners, Hakeem s Homeopaths etc. (c) Dentists 15,000 Diagnostic and Therapeutic Centers including 12 pathological and chemical laboratories (a) Located at Divisional 15,000 20,000 Head Quarter (b) Located at other places 3,600 7, Contractors, Suppliers and Consultants who, during preceding financial year supplied to the Federal or any Provincial Government or any local authority in the District, Goods, Commodities, or rendered services of the value (a) (b) (c) (d) when exceeding Rs. 10,000 but not exceeding Rs. 0.5 when exceeding Rs. 0.5m but not exceeding Rs. 1 when exceeding Rs.1.50 exceeding Rs. 2.5 when exceeding Rs. 2.5 exceeding Rs. 10 (e) when exceeding Rs. 10 exceeding Rs. 25 (f) when exceeding Rs. 25 exceeding Rs. 50 4,000 5,000 7,000 18,000 25,000 30,000 (g) when exceeding Rs. 50 million 100, Petrol/Diesel/CNG filling 8,000 12,000 stations 15 All establishments, including video shops, real estate shops/agencies, card dealers, and net cafes assessed or not to income tax in the preceding financial 3,000 5,000 year 16 Chartered Accountants with an independent audit practice and excluding those who are employed in companies not owned by them 15, Vehicles service stations 5,000 8, Transporters/Transport Companies (a) with Provincial headquarters limit (b) Others 3,000 2, Member of Stock Exchange 5,000

9 5 20 Money Changer (i) (ii) with Provincial Headquarters limits; and Others 10,000 5, Health Fitness Centers/Gymnasium (i) with Provincial Headquarters limits; and 2,000 (ii) Others 1, Jewelers 1, Departmental Stores 1,000 10, Electronic goods Stores 1, Cable Operators 1,000 10, Printing Presses 1, Pesticides Dealers 1, Tobacco Whole Sellers 2, Whole Sale Dealers/agency holder headings 10, Chemist/Druggist/Medical Stores headings 10, Tailor Shops (a) Shalwar Qameez 2,000 (b) Shalwar Qameez + wastecoat (c) Shilwar Qameez+wastecoat+pa nt shirt headings 5,000 10,000 KHYBER PAKHTUNKHWA FINANCE ACT, 2013 First Schedule Section 2(47) The Bill seeks to add a service category Ride hailing services in the First Schedule to the KPFA 2013