Tax on foreign property income: PTBA for larger bench to address ‘conflicting rulings’

KARACHI: The Pakistan Tax Bar Association (PTBA) has called for a larger bench to address conflicting rulings on the taxation of foreign property income, highlighting a growing legal uncertainty affecting Pakistani tax residents with properties in the UAE and UK.

In a letter sent to the chairman, Appellant Tribunal Inland Revenue (ATIR), PTBA said that recent contradictory decisions by different divisional benches of the ATIR have created confusion over whether rental income and capital gains from properties in the UAE and UK are taxable in Pakistan.

The Lahore Registry, in two separate rulings in 2022 and 2024, determined that such income is not taxable in Pakistan.

Resident Pakistanis in UAE, UK: Rental income, capital gain not taxable: ATIR DB

However, the Islamabad Registry ruled in November 2022 that similar income from UAE properties is taxable. These inconsistencies have created significant uncertainty for taxpayers, said PTBA, urging for clarity on this matter to ensure proper tax compliance and administration.

The association has formally requested the formation of a larger bench under Rule 3(2) of the ATIR (Functions) Rules, 2023, citing a precedent from 1997 which established that conflicting decisions by benches of equal strength can lead to “complications, confusion, and chaos” in tax administration. The resolution of this issue is particularly significant for the growing number of Pakistani tax residents who own properties abroad, especially in the UAE and UK.

Copyright Business Recorder, 2025