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ISLAMABAD: The Tax Law Amendment Ordinance, 2021, would introduce measures to facilitate non-resident Pakistanis to open non-resident Pakistani Rupee Value Accounts (NRVAs) and abolish sales tax on the import of CKD kits for electric vehicles by local manufacturers and removal of additional customs duty on imports of EV cars up to June 30, 2026.

Sources told Business Recorder Saturday that the Law Division has vetted the Ordinance which would be promulgated after the signing by the president.

Under the draft Tax Law Amendment Ordinance 2021, the board would have the power to share data or information including real-time data, videos, images received under the Sales Tax Act 1990 with any other ministry or division of the federal government or provincial government, subject to the limitations and conditions as may be specified by the board. The government may exempt sales tax on goods temporarily imported into Pakistan by international athletes or sportsmen which would be subsequently taken back by them within 120 days of temporary import, as per draft Tax Law Amendment Ordinance 2021. Through the proposed Tax Law Amendment Ordinance 2021, every motor vehicle registering authority of the Excise and Taxation Department shall collect advance tax from the buyers of the locally-manufactured motor vehicles who subsequently sell it within 90 days of delivery of such vehicles, whether prior to or after registration, at the specified rates.

Provided that no collection of this advance tax would be made after June 30, 2021.

Under the draft Tax Law Amendment Ordinance 2021, every banking company maintaining a foreign currency value account (FCVA) or a non-resident Pakistani Rupee Value Account (NRVA) of a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for overseas Pakistanis (NICOP) or computerised national identity card (CNIC) shall deduct tax from capital gains arising on disposal of debt instruments and government securities and certificates (including Shariah-compliant variant) invested through aforesaid accounts at the specified rates.

Through an amendment in section 236C of the Income Tax Ordinance 2001 under the Tax Law Amendment Ordinance 2021, if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for overseas Pakistanis (NICOP) or computerised national identity card (CNIC) who has acquired the sale immovable property through a foreign currency value account (FCVA) or a non-resident Pakistani Rupee Value Account (NRVA) maintained with the authorised banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability in lieu of capital gains taxable under Section 37 of the Income Tax Ordinance 2001 earned by the seller or transferor from the property so disposed off.

If the buyer or transferee is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for overseas Pakistanis (NICOP) or computerized national identity card (CNIC) who has acquired the said immovable property through a foreign currency value account (FCVA) or a non-resident Pakistani Rupee Value Account (NRVA) maintained with the authorised banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee, draft Ordinance said.

Under the draft Tax Law Amendment Ordinance 2021, the rate of advance tax on sale to distributors, dealers or wholesalers of fertilisers shall be 0.25 percent, if they already are or get themselves registered under the Sales Tax Act 1990 within 60 days of the promulgation of the Tax Law Amendment Ordinance 2021.

As per draft Tax Law Amendment Ordinance 2021, it is proposed that the rate of tax deducted under Section 151 of the Income Tax Ordinance 2001 shall be 10 percent from the profit on debt from a debt instrument whether conventional or Shariah-compliant, issued by the federal government under the Public Debt Act 1944 or its wholly owned special purpose company, purchased by a resident citizen of Pakistan, who has already declared foreign assets to the Board through a foreign currency value account (FCVA) maintained with authorised banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan.

Provided that the tax so dedicated would be the final tax.

The provisions of section 100BA and rule 1 of the Tenth Schedule of the Income Tax Ordinance may not be applicable on non-resident individual holding Pakistan Origin Card (POC) or National ID Card for overseas Pakistanis (NICOP) or computerized national identity card (CNIC) or a non-resident Pakistani Rupee Value Account (NRVA) maintained with the authorised banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan,

The tax payable by cotton ginners on their income and profits shall not be more than sum of one percent of their turnover from cotton lint, cotton seed, cotton oil seed and cotton seed cake, the draft Ordinance stated.

The provisions of section 231A, 231AA and 236P shall not apply to the holders of the foreign currency value account (FCVA) and non-resident Pakistani rupee value account (NRPRVA) in respect of their accounts only.

The provisions of clause (ae) of sub-section 1 of section 114 and section 181 of the Income Tax Ordinance shall not apply to a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for overseas Pakistanis (NICOP) or computerised national identity card (CNIC), foreign currency value account (FCVA) or a non-resident Pakistani Rupee Value Account (NRVA) maintained with the authorised banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan.

Provided that this clause shall not apply in certain cases as specified in the Tax Law Amendment Ordinance, 2021.

The Ordinance is expected to waiver off other taxes already approved by the Cabinet to facilitate promotion of four-wheeler electric vehicles (EVs) in the country. The Cabinet had approved the removal of additional customs duty and three percent additional sales tax on imports of EV cars.

Copyright Business Recorder, 2021

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