According to Income Tax Circular No. 04 of 2017 issued on Wednesday and FBR disclosed that IT companies registered in July 2012 and onwards can get exemption introduced for start-ups.
The FBR stated, “Existing undertakings engaged in similar businesses incorporated or registered on or after July 1, 2012, are also entitled to this exemption subject to certification by PSEB”.
“The decision has been taken by keeping the changes in view that were recorded in Income Tax Ordinance 2001 through Finance Act, 2017. The concept of startups is rooted in Section 2(62A)’’; says FBR.
The main objective of introducing this concept is to support and enhance the idea of entrepreneurship in the country especially in the field of Information Technology.
Criteria of Startup
The concept of a startup refers to the idea of a business set-up established by an individual resident, AOP or by an organization having a turnover of about Rs. 100 million in the last 5 year tax period.
A start-up can also be concerned as a business which is registered and certified by the (PSEB) Pakistan Software Export Board and helps in providing technology related products to several economic sectors.
Furthermore, to encourage start-ups, it has been announced that the exemption will be according to the profit these entities will be receiving in the tax year they got certified by the PSEB and the two succeeding tax years.
As per Finance Bill 2017, another meaning of ‘Startup Business’ has been presented for people (being an occupant singular, Association of Persons or Company having a yearly turnover of under Rs100 million in last five tax years) occupied with innovation-driven products or administrations affirmed by Pakistan Software Export Board (PSEB).
The benefits of such businesses have been exempted from tax, including least tax, for a period of three tax years. Withholding tax will likewise not matter on payments got by such businesses.
