Investments in real estate: Overseas Pakistanis now eligible for exemption from higher tax rates

KARACHI: In a significant move to attract foreign investments in the real estate sector, overseas Pakistanis are now eligible for exemption from higher tax rates under sections 236C and 236K, even if they do not appear on the Active Taxpayers List (ATL).

According to the letter issued the other day, the Federal Board of Revenue (FBR) has made a significant streamlining of the tax exemption process for overseas Pakistanis holding Pakistan Origin Cards (POC) or National ID Cards for Overseas Pakistanis (NICOP).

Under Clause 111AC of the Income Tax Ordinance, 2001, non-resident individuals holding POC or NICOP are now eligible for exemption from higher tax rates under sections 236C and 236K, even if they do not appear on the Active Taxpayers List (ATL).

FBR imposes new condition on overseas Pakistanis

The FBR has implemented a new digital verification system through IRIS to facilitate this process. Non-resident taxpayers seeking exemption must now upload their POC or NICOP documentation while creating their Computerized Payment Receipt (CPR). The system will generate a provisional PSID, initiating a streamlined verification process.

“This new system represents a significant step forward in facilitating overseas Pakistanis,” said a senior FBR official. “The verification process has been designed to be completed within one business day, ensuring minimal delays for applicants.”

The verification process involves multiple layers of scrutiny. Chief Commissioners of Inland Revenue (CCIRs) oversee the initial review before cases are forwarded to Commissioners of Inland Revenue (CIRs) for final verification. Applicants will receive immediate notification via SMS and email upon approval.

This initiative is being implemented across all tax offices, including Large Taxpayers’ Offices (LTOs), Medium Taxpayers’ Office (MTO), Corporate Tax Offices (CTOs), and Regional Tax Offices (RTOs), ensuring comprehensive coverage for all eligible overseas Pakistanis. The move is expected to significantly reduce bureaucratic hurdles for overseas Pakistanis investing in Pakistan’s real estate sector, aligning with the government’s broader economic objectives of encouraging foreign investment.

Copyright Business Recorder, 2024