FBR slaps 40 per cent windfall tax on bank profits for two years

The Federal Board of Revenue (FBR) has imposed a 40 per cent windfall tax on the profits of banks for the years 2021 and 2022, according to a notification issued on Wednesday.

The windfall tax mechanism, which was announced in the budget for the current fiscal year, aims to collect additional revenue from the banking sector, which has seen a surge in profits amid the Covid-19 pandemic.

The FBR said that the banks have to pay the windfall tax by November 30, 2023, along with their income tax returns.

The windfall tax will be calculated on the basis of the difference between the actual profits and the average profits of the preceding three years, multiplied by 40%.

The FBR said that the windfall tax is a one-time measure and will not affect the normal taxation regime of the banks.

Reporter: Waqas Azeem