ISLAMABAD: The Pakistan Business Council (PBC) has expressed serious concerns over the Federal Board of Revenue’s (FBR) SRO 229(I)/ 2023 for maintaining records of beneficial owners by companies/ foreign investors despite the presence of comprehensive documentation as mandated by the Securities and Exchange Commission of Pakistan (SECP).

The PBC has written a letter to FBR Chairman Asim Ahmad on the implications of the SRO on the corporate sector.

The FBR had issued SRO 229(l)/ 2023 dated February 28, 2023 that proposed amendments to the Income Tax Rules, 2002 to introduce a new chapter of ‘Record of Beneficial Owners’ for the companies.

In this regard, the PBC has asked the FBR to immediately withdraw the SRO about the retention and provision of records of beneficial owners of companies.

The SECP has already mandated that companies maintain a record of Ultimate Beneficial Owners through the introduction of Section 123A of the Companies Act 2017, and through amendments to the Companies (General Provisions and Forms) Regulations, 2018 in the form of SRO 928(I)/ 2020, which includes new 19A - Additional Particulars of Ultimate Beneficial Owners.

The SECP’s legal requirements contain a detailed procedure for companies to identify and obtain information on their ultimate beneficial owners, and to report the same to the SECP through several prescribed forms.

As per the SECP’s SRO 928(I)/2020, the company is required to make a note of declarations in a register of ultimate beneficial owners maintained by it for such purpose containing various particulars such as name, father’s name/ spouse’s name, CNIC/ NICOP/ passport number along with date of issue, nationality, country of origin, usual residential address, email address, date on which shareholding, control or interest was acquired in the company, date on which shareholding, control or interest was acquired in the company from former ultimate beneficial owner, and in case of indirect shareholding, control or interest being exercised through intermediary companies, entities or other legal persons or legal arrangements in the chain of ownership or control, the company shall take reasonable measures to obtain names and particulars of the ultimate beneficial owner of the legal persons or arrangements.

As such, complying with the existing requirements set by the SECP is already a considerable undertaking, given the extensive and comprehensive list of particulars required. Therefore, the FBR’s proposal in SRO 229(1)/ 2023 is not only redundant but it also doubles the work, which will certainly go against the slogan of “ease of doing business in Pakistan” for foreign investors.

While Pakistan has been actively pursuing reforms and initiatives to improve its ranking in the World Bank’s Ease of Doing Business Report, the proposed amendment, with its added bureaucracy and its potential to increase the burden on businesses, may in fact undermine any progress, the PBC added in its letter.

Copyright Business Recorder, 2023