Owned by resident Pakistanis: FBR starts taxing hundreds of foreign properties
- FBR has exercised its right of taxation of such foreign rental income in Pakistan and the owners of such properties are entitled to take tax credit
ISLAMABAD: The Federal Board of Revenue (FBR) has started taxing hundreds of foreign properties owned by resident Pakistanis, earning rental income, in the United States, the United Kingdom, Canada, Spain, UAE and Turkey.
Sources told Business Recorder here on Friday that the concerned Automatic Exchange of Information (AEOI) Zones have taken necessary action against the income tax return filers, who declared rental income from foreign properties held abroad.
There are hundreds of such cases of “foreign source immovable property income” in foreign jurisdictions such as the UK, the USA, Turkey, Spain, Canada, and the UAE which are under process, the sources said.
According to the sources, these resident Pakistanis have declared rental income generating from the foreign properties held in the said foreign jurisdictions as “exempt income”. They have declared rental income as “exempt income” in their income tax returns. These resident Pakistanis have declared exempt income from rental income generating from the foreign properties held in the said foreign jurisdictions.
The owners of properties have taken the plea of Double Taxation Avoidance Agreements where rental income is already taxed in the said country. Pakistani taxpayers have pleaded for not taxing the foreign source immovable property income from the UAE and other countries under double taxation treaties.
However, the FBR has exercised its right of taxation of such foreign rental income in Pakistan and the owners of such properties are entitled to take tax credit of tax paid in foreign jurisdiction in their income tax returns.
Non-filers to pay increased rates of WHT
Officials said that there is no bar under international law for the state of residence (Pakistan) to impose a tax on income from property situated in another country.
Sources said that the later judgement of Appellate Tribunal Inland Revenue (ATIR), Islamabad will prevail on the taxation of foreign properties. The earlier judgment of the Lahore tribunal IR will not prevail. Under the law, only the latest judgment on similar issue can prevail, they added.
Copyright Business Recorder, 2022
Comments
Comments are closed.