Committee Proposes 0.5% Tax for Key Distributors

The National Assembly Standing Committee on Finance and Revenue has recommended the introduction of a reduced minimum tax rate of 0.5% for distributors, dealers, sub-dealers, and wholesalers dealing in specified categories of goods under the proposed amendments to the Finance Bill 2026-27.

According to the committee’s recommendation, the reduced rate would apply under Section 113(1) of the Income Tax framework, subject to a compliance condition that the relevant taxpayer must be listed on the Active Taxpayers Lists maintained under both the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001.

The proposed concession would cover distributors and wholesalers operating in 14 categories of goods. These include pharmaceutical products, fertiliser, cigarettes, sugar, locally manufactured mobile phones, and fresh or frozen food products sold in canned or packaged form.

The scope of the proposal further extends to electronics, beverages, dairy products, pasta, cereals, biscuits, nuts, snack products, and other similar packaged food items.

In addition, the recommended reduced minimum tax rate would also apply to condiments and baking products sold in bottled or packaged form, as well as consumer goods such as skincare products, cosmetics, hair care items, oral care products, baby care items, and household cleaning products including laundry detergents, dishwashing soaps, and floor cleaners.

The list of covered goods also includes paper-based household and hygiene products such as toilet paper, paper towels, facial tissues, napkins, and similar items, along with trash bags, aluminium foil, air fresheners, insect sprays, and related consumer-use products.

Separately, the committee has also proposed the imposition of a 5% withholding tax on revenues earned through social media platforms.

These recommendations form part of the committee’s 15-page report on proposed amendments to the Finance Bill 2026-27, which is scheduled to be presented before the National Assembly for further legislative consideration.