Wedding halls to charge 10 per cent withholding tax on events

ISLAMABAD: After the Federal Board of Revenue (FBR) has introduced a 10 per cent withholding tax on wedding and other events, wedding hall owners on Friday announced that they will begin collecting the levy from future bookings.

FBR officials and representatives of the Wedding Hall Owners’ Association reached an agreement on the implementation of the new tax.

The association’s president said that all individuals hosting events at wedding halls will now be required to pay the 10 per cent withholding tax, in addition to the rental charges. The collected tax will be remitted directly to the FBR, he said.

“This withholding tax is being implemented at the direction of the FBR and is separate from the rental cost of the wedding hall,” the president said, emphasising that customers will see a clear distinction between the hall’s charges and the tax amount.

The move comes as part of broader tax reforms introduced by the federal government under its agreement with the International Monetary Fund (IMF).

Previously, the FBR had mandated the integration of point-of-sale (POS) systems for restaurants, shopping centres, and retailers, sparking resistance from traders.

In July,  several wholesale markets were shut down in protest by the wholesale grocers against the withholding taxes introduced in the budget on the call of Wholesaler and Grossers Association.

Similarly, the Flour Mills Association staged a strike after the FBR announced to collect withholding taxes.

The new tax policy reflects ongoing efforts to expand the country’s tax base, though it has already drawn mixed reactions from stakeholders.

The FBR has collected Rs2.74 trillion in withholding taxes (WHT) during the ongoing fiscal year with taxes on contracts being the largest contributor.

This shows an increase of 36.5 per cent from Rs2.007 trillion collected last year. All major WHT categories saw growth, with dividends experiencing the highest rise at 69.9 per cent.

Other significant increases included Technical Fees (53.6 per cent), Profit on Debt/Bank Interest & Securities (52.8 per cent), salaries (39.3 per cent) and the sale of immovable property (37 per cent).

According to Mettis Global, WHT accounted for 29.47 per cent of the total Rs9.299 trillion revenue, up from 28.02 per cent the previous year.

The largest portion of WHT came from contract payments (18 per cent), followed by Profit on Debt/Bank Interest (18 per cent), salaries (13 per cent), dividends (5 per cent) and electricity bills (5 per cent).

These five categories made up 59 per cent of the total WHT collection.