FINANCIAL JOURNAL

This article is in continuation to our previous articles on 'VAT in Saudi Arabia'  and 'Understanding Taxation in GCC' which were published prior to the introduction of final VAT law in Kingdom of Saudi Arabia (KSA). However, since the detailed VAT law has now been finalised we will be publishing series of articles for different provisions of the said law. In this particular blog we will discuss the mechanics of VAT invoicing in KSA. VAT-registered suppliers must produce invoices documenting revenue and tax information on all taxable sales. Following are the 5 things you need to know about VAT invoicing in Kingdom of Saudi Arabia: 1. DATE OF ISSUANCE The VAT invoices are to be raised any time on or before 15th day of the month following the month when the transaction occurred.  2. COMPLEX VAT INVOICE - TRANSACTIONS ABOVE SAR 1,000 The VAT invoice must include the following details related to the transaction, provided in Arabic : The inv...

The Federal Board of Revenue (FBR) in collaboration with Tax Reform Commission Implementation Committee (TRIC) is in process of finalising the anticipated Foreign Assets Tax Act, 2017. The basic features of the proposed law have already been drafted. Under the initial draft the foreign assets tax shall be introduced soon through the Foreign Assets Tax Act, 2017. The proposed Act would deal with the problem of undisclosed foreign assets, income and expenditures, and to provide with procedure to impose tax on any such undisclosed asset and expenditures held or incurred outside Pakistan.  Following are the 5 things you need to know about the proposed Foreign Assets Tax Act, 2017.  1. SCOPE OF FOREIGN ASSETS TAX ACT, 2017 As per the initial reports and sources the scope of Foreign Assets Tax Act, 2017 shall be the legalisation of: Undisclosed Foreign Assets held outside Pakistan; Undisclosed Income earned outside Pakistan; or Undisclosed Ex...

W ho is required to file a return of income? Remember how the government used to publish a list of persons required to file return of income in the newspapers? However, that list has expanded over a period of time making it difficult to be published and now we only see general advertisements regarding filing of returns within the deadline. In this blog we will discuss the ten conditions prescribed in Section 114 of the Income Tax Ordinance, 2001 making a 'person' liable to file income tax return in Pakistan. 1.  Company Every company formed, established and operated in Pakistan as described below including permanent establishment of a foreign company is liable to file a return of income. A company includes following: Company as defined in the Companies Ordinance, 1984 (XLVII of 1984);  Body corporate formed by or under any law in force in Pakistan;  Modaraba;  Body incorporated by or under the law of a country outside Pakistan relating ...

In this blog we will discuss the procedure of apportionment of expenditure, deduction and allowance which relates to the following: (i) the derivation taxable income of more than one head of income; or (ii) derivation of taxable income and any class of income subject to Final Tax Regime. (iii) the derivation of income chargeable to tax under any head of income and to some other purpose Rules for apportionment of expenditures, deductions & allowances (Rule 13) Common expenditure, deductions & allowances means any expenditure, deductions & allowances that is not clearly allocable to any particular class or classes of incomes. Rules regarding apportionment of such expenses, deductions & allowances are given as follows: Any expenditure, deductions & allowances that is incurred for particular class of income (chargeable income, FTR income or exempt income) shall be allocated/apportioned to that class only. Fourmula: Any common expenditur...

1.1. After the receipt of appellate order of the Appellate Tribunal, the taxpayer or the tax department may file a reference application in order to avail the advisory jurisdiction of High Court on any point of law.  1.2. Section 133 of the Income Tax Ordinance, 2001 deals with this issue and the said section states that: 1.3. The taxpayer or the Commissioner who find themselves aggrieved upon the order of the Appellate Tribunal can within  ninety days  of the communication of an order of the Appellate Tribunal make an application in the prescribed form to the High Court. 1.4. The application should be filed only as a result of any question of law arising out of such order. 1.5. The statement to the High Court referred to in above para shall set out the facts, the determination of the Appellate Tribunal and the question of law which arises out of its order. 1.6. If the High Court is satisfied that a question of law arises out of the order of t...

1. General rule for taxability of individuals - Income Tax Ordinance, 2001 1.1. As per the provisions of Section 86 of the Income Tax Ordinance, 2001 the taxable income incase of individuals shall be determined separately for each individual.  1.2. However, there are certain exception to this general rule. These exceptions are discussed in detail as under: 2. Exceptions to the general rule for taxability of individuals 2.1. Deceased Individual: 2.1.1. Incase of a deceased individual the liability to discharge the tax assessed is transferred as against the general rule discussed above. 2.1.2. As per the Section 87 of the Income Tax Ordinance, 2001 the responsibility of taxation of a deceased individual is transferred to the legal representative in respect of following: Any outstanding tax to be paid by the deceased person if he had not died; and Any tax payable on the income generated from the deceased estate 2.1.3. Limitation of Liability - L...

1. INTRODUCTION 1.1 The exemptions provided under the Income Ordinance, 2001 are spread all over the said statute under various provisions and in order to have an in depth understanding of the same it is very important to analyse all the relevant provisions and to arrange them in a single meaningful way. 1.2 In this blog all efforts have been made to arrange the provisions regarding the exemptions under the Income Tax Ordinance in one place for an easy understanding of its valuable readers. 2. OVERVIEW OF EXEMPTIONS PROVIDED UNDER INCOME TAX ORDINANCE, 2001 2.1 The provisions of exemptions provided under the Income Tax Ordinance, 2001 can be divided into following three broad categories which will be discussed in detail later in this blog: Exemptions and Tax Concessions provided under Part VII of Chapter III of the Income Tax Ordinance, 2001; Exemptions under the ambit of Section 159 of the Income Tax Ordinance, 2001; and  Exemptions and Reduction ...

1. Introduction 1.1  Constitution of Pakistan has empowered both Federal and provincial governments to legislate for collection of their revenues in certain jurisdictional manner. Therefore, it is essential to know who authorises which revenues. In this blog we will discuss the mechanism for determination of distribution of revenue among the Federation and Provincial governments. 2. National Finance Commission - NFC 2.1 The president within 6 month of his commencing day and thereafter at intervals not exceeding 5 years shall constitute a National Finance Commission (NFC) which consists of Ministry of Finance for Federal Government and Minister of Finance for Provincial Governments and such other person as may be appointed by the president. 2.2 The core responsibility of National Finance Commission is to recommend the president as to the following matters: Distribution of the tax collected within the federal and provincial governments; Distribution of g...