Income Tax Ordinance, 2001 — Section 7: Tax on shipping and air transport income of a non-resident person

7. Tax on shipping and air transport income of a non-resident person.

(1)Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division V of Part I of the First Schedule, on every non-resident person carrying on the business of operating ships or aircrafts as the owner or charterer thereof in respect of –

(a)the gross amount received or receivable (whether in or out of Pakistan) for the carriage of passengers, livestock, mail or goods embarked in Pakistan; and

(b)the gross amount received or receivable in Pakistan for the carriage of passengers, livestock, mail or goods embarked outside Pakistan.

(2)The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amount referred to in sub-section (1).

(3)This section shall not apply to any amounts exempt from tax under this Ordinance. 1 Inserted by the Finance Act, 2018 2 The expression “, fee for offshore digital services] or fee for technical services” substituted by the Finance Act, 2022. 3 Section 6A inserted by the Finance Act, 2025. 38 Chapter II – Charge of Tax 1 [7A. Tax on shipping of a resident person.—(1) In the case of any resident person engaged in the business of shipping, a presumptive income tax shall be charged in the following manner, namely:

(a)ships and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bare-boat chartered and flying Pakistan flag shall pay tonnage tax of an amount equivalent to one US $ per gross registered tonnage per annum; 2[ ]

(b)ships, vessels and all floating crafts including tugs, dredgers, survey vessels and other specialized craft not registered in Pakistan and hired under any charter other than bare-boat charter shall pay tonnage tax of an amount equivalent to fifteen US cents per ton of gross registered tonnage per chartered voyage provided that such tax shall not exceed one US $ per ton of gross registered tonnage per annum: Explanation.—For the purpose of this section, the expression “equivalent amount” means the rupee equivalent of a US dollar according to the exchange rate prevalent on the first day of December in the case of a company and the first day of September in other cases in the relevant assessment year 3[;and

(c)A Pakistan resident ship owning company registered with the Securities and Exchange Commission of Pakistan after the 15 th day of November, 2019 and having its own sea worthy vessel registered under Pakistan Flag shall pay tonnage tax of an amount equivalent to seventy five US Cents per ton of gross registered tonnage per annum.]

(2)The provisions of this section shall not be applicable after the 30thJune, 4[2030].”] 5 [7B. Tax on profit on debt.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151. 1 Inserted by the Finance Act, 2015 2 The word “and” omitted through Finance Act, 2020 dated 30th June, 2020 3 Full stop at the end substituted by semi-colon and the word “and” thereafter new clause “(c)” shall be added namely through Finance Act, 2020 dated 30th June, 2020 4 The word 2020 substituted by 2030 through Finance Act 2020 dated 30th June, 2020 5 Inserted by the Finance Act, 2015 39 Chapter II – Charge of Tax

(2)The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt. 1[(3) This section shall not apply to a profit on debt that –

(a)is exempt from tax under this Ordinance; or

(b)exceeds 2[five] million Rupees.]