Foreign investors/non-resident companies are free to obtain 'advance ruling' on income tax matters for avoiding tax disputes later on. Official sources told Business Recorder on Tuesday that most of the foreign or non-resident companies have engaged tax consultants to process their income tax matters.
Therefore, it was not mandatory that every foreign investor coming to Pakistan was bound to take 'advance ruling' from income tax department. If a tax consultant finds any legal complication in the processing of income tax documents, he may proceed for 'advance ruling'.
Tax experts processing income tax matters smoothly do not require to go for 'advance rulings'. 'Advance ruling' is a provision available for foreign investors.
When asked about the number of investors who obtained such ruling, officials said that non-residents have been given the facility of 'advance ruling' for promoting foreign direct investment in the country and to resolve all uncertainty regarding tax matters.
In this connection, Income Tax Ordinance 2001 and Income Tax Rules are very much clear on different issues. Therefore, even if a few investors obtained rulings, it does not mean that there is some problem with the existing provision. On the other hand, it shows that the income tax matters are timely processed without any complications.
CBR had constituted a committee for finalising applications filed by non-resident companies regarding 'advance ruling'. The committee is headed by Chairman CBR, and Member Direct Taxes and Additional Secretary, Law, Justice and Human Rights Division are its members.
According to the procedure, a non-resident person desiring an advance ruling under section 206A of the Ordinance, 2001 will make an application to the CBR in the form set out in the Schedule of the draft notification.
The committee will have the authority to examine the application filed by a non-resident company. However, CBR is bound to finalise application on 'advance-ruling' within 90 days of its filing.
The committee may obtain comments of the Commissioner of Income Tax concerned and, if it considers necessary, advice of a legal expert on the application, and decide the issue in a joint sitting or through circulation amongst its members.