Tax waiver on foreign loan interest extended until Dec 31

The National Board of Revenue (NBR) has extended the tenure of tax waiver on the interest amount of foreign-loan repayments to cushion foreign investors amid the current economic uncertainties.

The tax exemption on the interest amount of foreign loan repayment would be valid until December 31 this year, according to a Statutory Regulatory Order (SRO) issued on January 6, 2024.

The NBR exempted the tax until February 28, 2024 by issuing a SRO on November 30 last year. After issuing the latest SRO, the foreign investors have found no efficacy of the order without offering an open-ended tax waiver as their contracts are usually done for a longer period.

In the budget for the current fiscal year, the tax authority has for the first time imposed a 20 per cent tax at source on the interest amount of such loans taken from the external sources. However, the tax waiver would not be applicable for any advance payment of the interest amount of the foreign loans.

Also, it would not be applicable for the government's loan from the development partners like the International Monetary Fund (IMF) and the World Bank (WB).

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