Foreign Tax Relief and Tax Treaties for Individuals

foreign tax relief

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



Tax Deadline 2020

tax deadline 2020

There are many Pakistani citizens who are looking for tax deadline 2020 to be exceeded. FBR gave the last opportunity to citizen of Pakistan by extending last date of submission of tax return on 8, December 2020 according to notification issued by federal board of revenue.

tax deadline 2020
tax deadline 2020 notification

This is the final deadline issued by FBR and the persons who haven’t file their tax are imposed with a tax penalty of 0.1% of tax everyday after the deadline so the persons who are waiting for deadline to be exceeded must pay their tax as soon as possible in order to not imposed with higher penalty.

Tax Penalty on Late filing 2020

tax penalty

The federal board of revenue has implemented a increase in tax penalty on late filing of tax for year 2020. FBR has introduces total of 8 penalties which will become the part of law as well after parliamentary approval.

For all financial institutions which did not provide their all information regarding their non-resident timely, FBR has introduced four new sections to impose penalty on these institutions as required under section 165B on income tax ordinance 2001. Also, Pakistan is required to share all the information of non-residents with member countries.

To get the requited information on time, government proposed four penalties for non-compliant entities. In case of non-compliance, institution will have to pay a penalty of Rs. 10000 on each default and also addition of Rs. 10000 each month until the default is addressed

Moreover, a penalty of Rs. 50000 will be imposed on false-self certification under common reporting standard rules and the addition of Rs. 50000 once it is not get addressed.

The last date of submission of tax was 8 December 2020 and after that, tax deadline doesn’t exceed. The person not able to submit their tax are imposed a tax penalty of 0.1% of the tax everyday after the tax deadline.

FBR INVOICE MANAGEMENT SYSTEM

FBR INVOICE MANAGEMENT SYSTEM

Offline Technologies is a Providing vast amount of IT services from development of a product too integration of different system that’s why FBR has introduced FBR invoice management system.

Invoice Management System/POS
FBR Invoice management system is the method by which companies track and pay invoices. At its most simple, the process involves receiving an invoice from a third party, validating it as legitimate, paying the supplier, and noting the payment in company records.

FBR IMS SOFTWARE
The purpose of the IMS is to facilitate tier 01 retailer to Understand methods for invoice data sharing with FBR. The software fiscal component will be installed on the same computer on which POS is installed. The fiscal component will be integrated with POS system to generate invoice and returns Fiscal invoice number.

Benefits
• Real-Time Integration with FBR System
• Automatic uploading of invoice data in FBR System
• Prepopulated into Annex- C of Sales Tax Return

WHY DO YOU NEED THIS?
• It’s fast and simple.
• Everything is stored so you don’t lose your record.
• Its secure
• Cost saving
• Reduces error and disputes
• 24/7 excess to your record

LAW
ALL Tier-1 retailer required to integrate their POS with FBR system for submission of sale invoice on real-time basis.

*AS IT IS THE LAW YOU NEED THIS FOR YOUR OWN BUSNIESS SECURITY AND STABILITY.

For the benefits of consumers, Offline Technologies is offering following services in POS

• Integration (Installation) of FBR software with Existing POS

• FBR IMS integrated System

Contact Us Now

Withholding tax rates for income from property

Withholding tax rates for income from property

The withholding tax rates on rental income from the immovable property for the tax year 2021 has been updated by the Federal Board of Revenue (FBR).


After incorporating amendments to the Income Tax Ordinance 2001 enacted by the Finance Act 2020, the FBR updated the Withholding Tax rates for 2020-2021.

The FBR said that under Section 155 of the Income Tax Ordinance 2001, every designated person would gather/deduct withholding tax from the real estate of immovable property on payment of rent at that time.

According to Section 155: Income from property

A): Following are withholding tax for individuals or AOP


  • If the total amount of rent does not exceed Rs. 200,000: Tax rate will be zero.

  • If the total amount of rent is more than Rs. 200,000 but does not exceed Rs. 600,000 then withholding tax would be 5% of the total amount exceeding Rs. 200,000

  • If the total amount of rent exceeds Rs, 600,000 but does not exceed Rs, 1,000,000 then Rs, 20,000 plus 10 percent withholding tax of the total amount exceeding Rs, 600,000.

  • If the total amount of rent exceeds Rs, 1,000,000 but does not exceed Rs, 2,000,000 then Rs,60,000 plus 15 percent withholding tax of the total amount exceeding Rs, 1,000,000

  • If the total amount of rent exceeds Rs, 2,000,000 but does not exceed Rs. 4,000,000 then Rs, 210,000 plus 20 percent withholding tax of the total amount exceeding Rs, 2,000,000

  • If the total amount of rent exceeds Rs.4,000,000 but does not exceed Rs. 6,000,000 then Rs.610,000 plus 25 percent withholding tax of the total amount exceeding Rs.4,000,000

  • If the total amount of rent exceeds Rs.6,000,000 but does not exceed Rs. 8,000,000 then Rs.1,110,000 plus 30 percent withholding tax of the total amount exceeding Rs.6,000,000

  • If the total amount of rent exceeds Rs.8,000,000 then Rs.1,710,000 plus 35 percent withholding tax of the total amount exceeding Rs.8,000,000

B): Withholding tax for companies is 15 percent. The tax will be as per the requirement as compared to the total tax liability.






Withholding Tax on Vehicle Registration and Transfer

withholding tax on vehicle registration

Federal  Board of Revenue (FBR) has recently updated the Withholding tax rates on any vehicle registration and for transfer of vehicles for the year 2020-21 from 30th of june, 2020.

Withholding tax under Section 231B:

The withholding tax rate under  section 231B for private vehicles is that withholding tax shall be collected by vehicle registration authority when purchasing newly manufactured vehicle at that time when vehicle is transferred to the person  who is purchasing the vehicle.

For the person not appearing on Active Taxpayer  List (ATL) , the withholding tax shall be increased to 100% for that person.

Here is the list of Withholding tax rates under the Section 231B:

Engine Capacity For ATL For Non-ATL
Up to 850CC Rs7,500 Rs15,000
851CC to 1000CC Rs15,000 Rs30,000
1001CC to 1300CC Rs25,000 Rs50,000
1301CC to 1600CC Rs50,000 Rs100,000
1601CC to 1800CC Rs75,000 Rs150,000
1801CC to 2000CC Rs100,000 Rs200,000
2001CC to 2500CC Rs150,000 Rs300,000
2501CC to 3000CC Rs200,000 Rs400,000
Above 3000CC Rs250,000 Rs500,000

Also Check: Vehicle Verification in Pakistan

Withholding tax rates under Section 231B (2):

According to Section 231B(2), Vehicle Registration Authority will collect withholding tax from the person who is transferring his ownership/registration when vehicle is being transferred.

The withholding tax rate under this section shall be as:

Engine Capacity For ATL For Non-ATL
Up to 850CC Rs0 Rs0
851CC to 1000CC Rs5,000 Rs10,000
1001CC to 1300CC Rs7,500 Rs15,000
1301CC to 1600CC Rs12,500 Rs25,000
1601CC to 1800CC Rs18,750 Rs37,500
1801CC to 2000CC Rs25,000 Rs50,000
2001CC to 2500CC Rs37,500 Rs75,000
2501CC to 3000CC Rs50,000 Rs100,000
Above 3000CC Rs62,500 Rs125,000

Withholding tax rates under Section 231B (3):

When a person is purchasing vehicle, withholding tax shall be collected by manufacturer of vehicle at the time of sale of vehicle. Withholding tax shall be adjustable to tax liability.

Under Division VII, Part IV of First Schedule of the Income Tax Ordinance, 200, withholding tax rates are as:

Engine Capacity For ATL For Non-ATL
Up to 850CC Rs7,500 Rs15,000
851CC to 1000CC Rs15,000 Rs30,000
1001CC to 1300CC Rs25,000 Rs50,000
1301CC to 1600CC Rs50,000 Rs100,000
1601CC to 1800CC Rs75,000 Rs150,000
1801CC to 2000CC Rs100,000 Rs200,000
2001CC to 2500CC Rs150,000 Rs300,000
2501CC to 3000CC Rs200,000 Rs400,000
Above 3000CC Rs250,000 Rs500,000

Vehicle Verification in Pakistan

vehicle verification in Pakistan

The Government of Pakistan has provided citizens an online system for vehicle verification in Pakistan for all type of vehicles (cars/motors) with computerized registration plates. If a person wants to purchase a new vehicle, he can check all details of that vehicle through this online vehicle verification system. This system is introduced because if you are looking to buy or purchase a new vehicle, you need to verify all vehicles details first.

In order to check vehicle verification, follow these steps:

  1. First, go to MTMIS.
  2. Here you will see the page of Vehicle Verification. All you need to do is enter the registration number of your desired vehicle, click on Search and you will see all information of that vehicle like make model of vehicle, color of that vehicle chassis number, type of vehicle and name of the owner of that vehicle.

Also Check: Income Tax Rates in Pakistan

The government of Pakistan also warned not to get into buying a stolen, non-costumed paid or tampered vehicle as it might result ending into court or jail.

Vehicle verification for KPK: http://balochistan.gov.pk/departments/excise-and-taxation/

Vehicle verification for Sindh: http://www.excise.gos.pk/vehicle/vehicle_search

Vehicle verification for Balochistan: http://balochistan.gov.pk/departments/excise-and-taxation/

You can get more details related to vehicle verification in Pakistan by visiting: https://cpomul.punjabpolice.gov.pk/

Income Tax Rates in Pakistan 2020-21

Income Tax Rates pakistan

Here are the income tax rates in Pakistan for year 2022-21

Also Read: What is withholding tax

Important Note:

Please note as for these income tax rates in Pakistan where a persons is not appearing in the active taxpayers’ list, the rate of tax required to be deducted or collected, as the case may be, shall be increased by hundred percent of the rate specified to be deducted or collected. However, these provisions shall not apply on tax collectible or deductible in case of the following sections.

  • Tax deducted under section 149
  • Tax deducted under section 152 other than sub-section (1), (1AA), (2), (2A)(b) and (2A)(c) of section 152
  • Tax collected or deducted under section 154
  • Tax deducted under section 156B
  • Tax deducted under section 155
  • Tax deducted under section 231A
  • Tax deducted under section 231AA
  • Tax collected under section 233AA
  • Tax deducted under section 235
  • Tax deducted under section 235A
  • Tax collected under section 235B
  • Tax collected under section 236
  • Tax collected under section 236B
  • Tax collected under section 236D
  • Tax collected under section 236F
  • Tax collected under section 236I
  • Tax collected under section 236J
  • Tax collected under section 236L
  • Tax collected under section 236P
  • Tax collected under section 236Q
  • Tax collected under section 236R
  • Tax collected under section 236U
  • Tax collected under section 236V
  • Tax collected under section 236X

Pakistan Customs Computerized System (PACCS)

Pakistan Customs Computerized System

Pakistan Customs Computerized System (PACCS) is one composed system covering all procedures, activities, and techniques relating to customs and custom tax.

A need for a computerized system was felt to redo and change the entire framework utilizing data Technology and business process reengineering after facing many issues by the Pakistan Customs Administration.


The purpose of the Customs Reform Process was to enhance the organizational performance of Pakistan Customs, transforming it into a modern organization that is performing its duties in the best possible manner and in accordance with international standards. Since international cargo clearance is the core of basic customs, the best way to measure the performance of a customs organization is to measure its dwell time.

KEY HIGHLIGHTS OF THE SYSTEM:

  1. It covers the entire field of customs activities.
  2. PACCS is ONE WINDOW OPERATION according to which declarants do not have to leave the comfort of their office for cargo Clearance from the port over the web anywhere inside or outside Pakistan.
  3. A concept of a completely paperless environment as all documents except in outer correspondences with specific foundations like the courts are generated by the system without any manual need.
  4. All information is organized and is redesigned distinctly through specific and committed input points. At the customer end, the information input is through drop-down menus and codes which helps to eliminate input mistakes.
  5. The exchange of all trade with customary partners is electronic
  6. Rapid clearance of cargo within 24/7 hours within hours of arrival.
  7. Self-assess duties and taxes and exclude customs before filing a declaration.
  8. Online Cargo Clearance Status Report.
  9. Online and instant duty drop approval
  10. Electronic filing and refund approval.
  11. Trouble-free and selective examination based on risk management
  12. Manifest data online.
  13. Secure assessment and evaluation condition.
  14. It is perfect with CSI and ISPS.
  15. No un-receipted costs.

The above impacts are being accomplished by the ideal utilization of data innovation. In IT phrasing, PACCS has an expert decision-making system.

For more information related to Customs, please visit Customs Basics.





What is the custom tax in Pakistan?

what is custom tax

The custom tax in Pakistan is defined as an indirect tax levied on import and export of goods is known as customs duty tax, also classified as import duty and export duty respectively.
Before registering and performing the various customs procedures, it is recommended that individuals familiarize themselves with all the basic concepts related to these procedures. A basic understanding of these concepts will not only ensure that things are done smoothly but also in a consistent manner.

Recommended: Property Tax in Pakistan 2019-20

Pakistan Custom Functions:

Custom tax in Pakistan is entrusted with guaranteeing that the following tasks are done in a lawfully endorsed way:

  • Trade Regulator

  • Trade Facilitation

  • Import & Export of legitimate cargo

  • Revenue Collection

  • Preventive (Control of contraband Goods)

TERMINOLOGies and definitions

Account:
“Account” signifies all books, records, correspondence, bank and other budget summaries.

Act:
“Act” means the Customs Act, the Act number IV of 1969 which is agreed on 3rd March 1969.

Decision authority:
Any authority which is eligible to pass an order under the Customs Act, 1969.

Appropriate officer:
An officer whose specific duties have been assigned under the Customs Act, 1969.

Collector:
“Collector”, “Additional Collector”, “Deputy Collector” and “Assistant Collector “meant a person who collects customs and is designated under Section 3 of the Act to an area of ​​its jurisdiction.

Customs airport /Customs port:
Any airport or port designated by the Board as a customs airport or board for clearance of imported goods in Pakistan.

Duties:
“Duties” means customs duties under the first schedule of the Customs Act, 1969.

Importer:
An importer is a person who imports goods and is responsible for completing the necessary legal import customs clearance procedures and formal commitments upon arrival of the goods in the country.

Pakistan Customs Computerized System(PACCS):
The PACC is a coordinated framework that covers all exercises and procedures identified with customs as defined in clause (IA) of section 2 of the Customs Act, 1969 (IV of 1969).

Vehicle:
Vehicle signifies an engine vehicle, motorcycle, van, microbus, transport, jeep, truck, and tractor with trailer or semi-trailer, etc.


Pakistan Customs is one of the elite cadres of Pakistan’s civil services. It is serving as Pakistan’s border guard against the movement of illicit goods and encourages substandard trade. It gave a significant wellspring of income to the Government of Pakistan as assessments. It also helps protect the domestic industry and boost trade.

Also for your reference, please check out the following documents for more information:
1. Pakistan Customs Tarif 2019-20
2. Fifth Schedule to the Customs Act, 1969 (2019-20)