The withholding tax regime for services has undergone an important change from 1 July 2026, with a specific 15% withholding tax rate prescribed for independent professional services. The category includes professionals such as doctors, lawyers, architects, accountants, and software engineers or developers working independently.
The amendment is particularly relevant from a cash-flow perspective. Since withholding is made from the gross payment at source, independent professionals may experience a larger upfront tax deduction from their professional receipts. The ultimate tax position would, however, continue to depend on the applicable provisions of the Income Tax Ordinance and the taxpayer’s final income tax computation.
The revised framework also introduces differentiated rates for other service categories. The reported changes prescribe 12% withholding for companies providing terminal and port operating services, while other services not specifically covered may attract withholding at 14% of the gross amount payable. Correct classification of the underlying service has therefore become even more important before determining the applicable withholding rate.