Pakistan Aluminium Beverage Cans Ltd clarify high WHT on Dividends

September 25, 2023

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Pakistan Aluminium Beverage Corporation (PABC) has clarified the exchange on incidence of high With Holding Tax on its Dividend.

PABC has informed that, as per the Finance Act of 2022, clause 11A sub-clause XIII of Part IV in the 2nd Schedule of the Income Tax Ordinance 2001 (ITO-2001) was omitted, thereby imposing a minimum tax under section 113 of ITO-2001 on the Company. The Company has filed a petition challenging the applicability of this minimum tax in the Honourable Islamabad High Court, and the matter is currently under judicial review.

PABC further stated that the actual rate of withholding tax is contingent upon the Court’s decision. If the Court rules in favor of the petition, the Company will be considered tax-exempt, and withholding tax on dividends will be 25% for tax filers and 50% for non-filers, as per Part I, 1st Schedule, Division III (d) of ITO-2001. Conversely, if the minimum tax is upheld, the applicable withholding tax rates will be 15% for filers and 30% for non-filers.

During the ongoing legal proceedings regarding minimum tax applicability, the Company will deduct withholding tax based on the tax-exempt status, i.e., 25% for filers and 50% for non-filers, but will deposit 15% or 30% (filer/non-filer) in a separate account in the government treasury until the Court issues a verdict. If the Court rules against the minimum tax, these funds will be transferred to the government treasury as withholding tax. Otherwise, they will be distributed to the shareholders.

A corrigendum regarding this matter was published in national newspapers on September 22, 2023. Please inform the Certificate Holders of the Exchange accordingly.