GOVERNMENT OF PAKISTAN

REVENUE DIVISION

CENTRAL BOARD OF REVENUE

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C.No. 3(8)SS(WHT)/99-2000                                                              Islamabad, November 16, 1999

(INCOME TAX)

SUBJECT: DEDUCTION/COLLECTION OF TAX FROM ADVERTISING AGENCIES

Attention of the Board has been drawn by All Pakistan Newspapers Society towards the problems being faced because of the procedure laid down in Board’s circular No.6 of 1999 for deduction/collection of withholding tax from advertising agencies under section 50(4A) of the Income Tax Ordinance, 1979. It has been explained that:-

1. the advertising agencies are agents of advertisers who choose the advertising agency as well as the media where their advertisement has to appear; and
2. full payment is made by advertiser to the advertising agency which retains its commission share of 15% of the total payment and passes on the balance 85% to the media.

2. It has been suggested that it would be appropriate if the advertiser makes payment in two parts, i.e. 15% for the advertising agent and 85% for the media, and deducts tax from each of these payments.

3. The issue has been examined by the Board and following revised procedure for deduction/collection of withholding tax from advertising agencies under sub-section (4A) of section 50 of the Ordinance, has been laid down:-

1. The advertiser shall make payment in two parts – one for advertising agency for commission amount of 15% of the total amount payable and the other for the balance 85% for the media; and

(Pervez Akhtar )

Secretary (Withholding Tax)

TEL: 9201448