NBR introduces prospective tax rate for the first time
The National Board of Revenue (NBR) is going to introduce a 'prospective tax system to enable taxpayers, including firms, to know the rate of taxes on their income in advance instead of waiting until the end of the income year.
Under the measure proposed in the parliament today by the finance minister, the NBR will retain 2024-25's tax rate for this year and the next year.
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The government said the prospective tax will facilitate the expansion of trade, improve investor confidence in the country's tax system, and encourage local and foreign investment.
"I believe that through a prospective tax system, taxpayers can do proper tax planning and help increase tax compliance," the finance minister said in his budget speech placed in the parliament today.
The NBR's move comes as taxpayers, particularly corporate taxpayers, have been demanding a predictable tax environment for the last several years.
Until last year, the NBR announced tax rates for firms and individuals after the end of an income year.
For instance, the current income year begins in July 2023 and will end in June 2024.
Based on the announced rates, taxpayers file their income and wealth statements and pay taxes on their incomes in the next year, termed the assessment year.
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