Archive March 2021

The Federal Board of Revenue (FBR) on Friday extended the deadline for updating taxpayer information until June 30, 2021.

FBR issued Circular No. 14 of 2021 March 26, 2021, to extend the date of renewal of the taxpayer profile from March 31, 2021 to June 30, 2021.

The date has been extended with a request for tax restrictions that coronavirus cases were on the rise and most offices were operating at 50% capacity.

Updating the profile of all taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a required requirement under Section 114A of the Ordinance.

In Finance Act, 2020, Section 114A is introduced to make the review profile binding to the following persons:

(a) every person applying for registration under section 181;

(b) every person who earns less than the head tax, “business income”;

(c) everyone whose income is less than the final tax;

(d) any non-profit organization as defined in subsection (36) of section 2;

(e) any trust or welfare fund; or

(f) any other person determined by the Board.

The FBR described a recently introduced section: “The complexity of return forms is an example of the complexity of tax law. However, there is a great need to simplify the return forms without compromising on the details required to ensure the accuracy of the published version. ”

The FBR said that instead of trying to get all the right information on tax returns, a new section could be set up where taxpayer information could be stored so that the taxpayer could take the correct information.

It states that persons who have registered before September 30, 2020, and receive business or income through the final tax, trusts, welfare organizations, non-profit organizations, and other persons defined by FBR are required to submit a profile on or before December 31, 2020, which has not been extended until -March 31, 2021.

Persons who receive their registration after September 30, 2020, are advised to submit that profile within 90 days of registration. In the event that there is a change in the details, those people will update their profile within 90 days of the change of details. The profile contains information relating to revenue in respect of bank accounts, communications used, business premises including all production, storage, or retail outlets operated or leased by the taxpayer, the types of businesses, and other information that may be provided by FBR.

FBR stated that if a person fails to provide or renew a taxpayer profile within a reasonable time or period extended by FBR under Section 214A, that person will not be included in the active taxpayer list for the last tax year ending before the date specified above or the date extended.

However, when filing or updating the profile, such persons will be allowed to be included in the list of active taxpayers in the case of a tax liability of Rs20,000 in the case of a company, Rs10,000 in the case of a corporation and Rs1,000 in the case of an individual.

In addition, the fine for non-filing or non-renewal of the profile is also increased at a rate of Rs2,500 per day non-payment of less than the minimum fine of Rs10,000.

Source: PkRevenue

According to Tax Laws (Second Amendment) the Ordinance, of 2021 was announced the day before, the amount of the tax penalty under Section 182 of a misleading or false statement has been reduced to 50 percent from the 100 percent tax balance.

Under Serial No. 10 of Section 182: any person who makes a false or misleading statement to the Inland Revenue Authority either in writing or orally or electronically includes a statement on request, certificate, declaration, notification, return, objection, or other documents including accounted documents made, prepared, provided, filed or provided under this Ordinance, then that person shall pay a fine of twenty-five thousand rand or 50 percent of the amount due in any of the above:

Provided that in the event of an inspection order contemplated under section 120, it shall not be penalized to the extent that the tax deduction occurs due to the taxpayer assuming an objection to the use of this Ordinance in place of taxpayers.

Under recent legislation, a fine for misleading information under Section 114A is prescribed. Section 114A relates to the profile of taxpayers.

Reference: PkRevenue

According to Profit.PkistanToday, taxpayers need to update their details by March 31, 2021, to avoid penalties and to be removed from the Active Taxpayers (ATL) list.

The last day to renew the profile was December 31, 2020, extended by the Federal Board of Revenue (FBR) until March 31, 2021, in view of the problems faced by taxpayers.

In terms of the Finance Act, 2020, Section 114A was included in the Income Tax Ordinance, 2001, regarding the taxpayer’s profile. According to the provision, the following persons are required to update their details on the IRIS: every person who applies for registration under Section 181; everyone earning taxable income under the head ‘money from business’; everyone whose income is taxed is the last; any non-profit organization as defined in subsection (36) of Section 2; any trustworthy or welfare organization; and any other person determined by FBR.

Details required to update the taxpayer profile are included: bank accounts; help communication; business premises, including all production, storage, or sales facilities operated or leased by a taxpayer; types of businesses; and other details that may be provided.

The FBR has issued a detailed statement on the matter stating that the difficulty of return forms is an example of the complexity of tax law. “However, there is a great need to simplify return forms without compromising on the details required to ensure that the translation is accurate.”

The FBR said that instead of trying to get all the right information on tax refunds, a new section could be set up where taxpayer details could be identified so that the taxpayer could take the correct information.

“A person who is already registered before September 30, 2020, and who receives business income or income through taxation, trust, welfare organizations, non-profit organizations, and other persons appointed by the board is required to submit a profile on or before December 31, 2020 (extended until March 31, 2021). ”

The FBR further stated that persons who received their registration after September 30, 2020 were proposed to submit the issue within 90 days of registration. In the event of a change in the details, those persons will update their details within 90 days of the change.

“The profile contains information relating to income in respect of bank accounts, communications, business premises including all production, storage or sales facilities operated or leased by the taxpayer, types of businesses and other information as determined by the board.”

FBR stated: “If a person fails to provide or update taxpayer details within a specified date or time as extended by FBR under Section 214A of the Ordinance, that person will not be included in the current active taxpayer list for the tax year ending before the due date or extended date.”

However, when filing or updating the profile, such persons will be allowed to be placed in the ATL upon payment of the other proposed tax of Rs20,000 in the case of a company, Rs10,000 in the case of a corporation (AOPs) and Rs1,000 in the case of a corporation of the individual.

“In addition, a fine of non-renewal or non-renewable profile of Rs2,500 per day for non-payment is subject to a minimum penalty of Rs10,000,” FBR said.

Foreign Tax Relief
If a person has paid foreign income tax in connection with this salary, then the salary of foreign resources received by a resident is exempt from tax in Pakistan.

Where a resident taxpayer receives foreign sources of income in exchange for taxes in Pakistan, the taxpayers have paid foreign taxes in this regard taxpayers are allowed to pay an amount equal to the tax less than the foreign income tax or an amount equal to the amount of Pakistan tax payable in respect of this income

Foreign sources of income are an exception for non-citizens of Pakistan if the person is a resident only for employment and no one has been in Pakistan for more than three years. This exception does not apply to businesses established in Pakistan and income from foreign sources brought or received in Pakistan.

Tax treaties
Tax treaties represent an important aspect of international tax law in many countries. A tax treaty is a two-party agreement between two countries to resolve issues related to double taxation on the passive and active income of each of its citizens. When an individual or business invests in a foreign country, a problem may arise as to which country will tax the investor’s earnings.

Pakistan has implemented tax treaties with more than 66 countries which are following:

Sr.No	Title
1	Bulgaria
2	Hong Kong
3	Brunei Darussalam
4	Czech Republic
5	Nepal
6	Kyrgyz Republic
7	Ukraine
8	Spain
9	Serbia
10	Yemen
11	Vietnam
12	United States of America
13	Uzbekistan
14	United Arab Emirates
15	United Kingdom.
16	Turkmenistan
17	Tunisia
18	Turkey
19	Tajikistan
20	Thailand.
21	Saudi Arabia
22	Syria
23	Switzerland
24	Sweden.
25	Sri Lanka
26	South Africa.
27	Singapore.
28	Romania.
29	Qatar.
30	Portugal
31	Poland
32	Philippines
33	Oman.
34	Norway.
35	Nigeria
36	Netherlands.
37	Morocco
38	Mauritius
39	Malta
40	Malaysia.
41	Lebanon.
42	Libya
43	Korea
44	Kazakhstan
45	Kuwait
46	Jordan
47	Japan

Reference Link: https://taxsummaries.pwc.com/pakistan/individual/foreign-tax-relief-and-tax-treaties