FINANCIAL JOURNAL

Dear Sir, SUB:    REQUEST FOR RENEWAL OF EXEMPTION CERTIFICATE UNDER SECTION 153 OF THE INCOME TAX ORDINANCE, 2001.                 We write to request you to kindly issue Exemption Certificate under section 153 of the Income Tax Ordinance, 2001. XYZ (Private) Limited was incorporated on ________ as a Private Limited Company and is engaged in the business of establishment, maintenance and operation of XYZ and other related services. Company’s Assessment for the Tax Year 20__, year ended June 30, ____ has been completed. The tax assessed last year was NIL. The Company pays minimum tax due to its brought forward losses The Company’s position is as under: Estimated Turnover for Tax Year 20__                                 ...

DISCLAIMER - The following discussion is subject to changes due to volatilty of the Tax statutes over the period of time. Recently, we witnessed certain high profile probes initiated against money laundering including the references filed as a result of Panama leaks. All these sudden developments have increased the risks involved in foreign remittances and therefore proper understanding of the prevailing laws is a must nowadays especially for genuine cases such as individuals remitting money from abroad which includes their life time savings. Foreign remittances are perhaps one of the major contributors in the growth of the economy made by residents, non residents, expatriates e.t.c. Besides Anti Money Laundering Act, 2010 certain technicalities regarding the taxability are raised once the remittance is made, and if, remained unexplained and not followed by the proper procedures laid down in the Income Tax Ordinance, 2001 the same might become subject to heavy ta...

Anti money laundering (AML) cell of the Intelligence and investigation inland revenue has now started investigating the families who's wealth have substantially increased as a result of gifts on which tax remained unpaid.  In a recent article published in daily Dawn, it has been claimed that certain wealthy people of Pakistan have laundered around 102 bilion Rupees through the prescribed gift scheme under the Income Tax Ordinance, 2001 in Tax Year 2016. In current Income Tax law gifts are exempted from tax and therefore large number of individuals have availed this facility transferring income, assets and wealth without contributing the same into the economy.  Sources of daily dawn confirmed that around 3000 people have laundered money by showing the same as gift received from individual family members and relatives not covered under the ambit of taxation. It was observed In certain cases that the gifts declared have reached up to 2 billion Rupees receive...

One of the most common proceedings initiated by the tax officials these days is under the provisions of section 122 of the Income Tax Ordinance 2001. This section termed as provisional assessment is probably the most technical in nature requiring detailed explanation and submission of documents. The proceedings under this section are often recurring in nature and therefore the entities should always be prepared for the same.  However, most of the time the format of the notice under section 122 of the Income Tax Ordinance 2001 is similar in nature in various cases, that is, the observations raised in different notices of section 122 are more or less same in nature. In this blog we will try to elaborate the general guidelines for replying notices sent under Income Tax Ordinance 2001. One of the most important tips in handling these sort of proceedings is to gain more time and not to submit all the details at once. For this the most important thing to note is that re...

Sub: MONITORING OF WITHHOLDING TAXES - TAX YEAR 2017 NTN:  Please refer to your letter No. Nil dated ___________. We write to inform you that you required us to reconcile the difference between amount on which Tax is deducted and expenses claimed as provided in sub rule (4) of rule 44 of the Income Tax Rules 2002 under section 176 of the Income Tax Ordinance 2001. In this regard we are submitting information / details for reconciliation as provided in Rule 44 (4) of the Income Tax Rule 2002 as mentioned below: It should also be worth noting that all expenses claimed in the return are not actually paid of as of the year end but some of the expenses claimed because of accrual basis of accounting. Further, the statements of tax deducted /collected under section 165 of Income Tax Ordinance 2001 only shows those deductions relating to payments made during the year and does not take account of creditors and accruals at year end. In view of the above, there should be clear und...

Dear Client The company is required to pay advance tax for the March Quarter (January 01, 2016 to March 31, 2016) installment by March 25, 20XX under section 147 of the Income Tax Ordinance, 2001 Ordinance). The mode of determining the advance tax liability under section 147 has been amended through Finance Act, 2009. Advance tax in the cases of Company is now payable on ‘turnover basis’ as per the following formula: (A x B/C) – D Where -- A is the taxpayer’s turnover for the quarter; B is the tax assessed to the taxpayer for the latest tax year; C is the taxpayer’s turnover for the latest tax year; and D is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 155 (Income from Property). Through Finance Act 2010, the due dates are changed as follows:  September 25  December 25  March 25  June 15 Through Finance Act 2015 a taxpayer shall estimate the tax payable for the relevant tax year, at ...

So, many people have questions regarding the difference between Sales Tax and VAT. This is due to the fact that in countries where Sales Tax is applicable people are generally unaware of V A T whereas in the countries where VAT is applicable people are unaware of Sales Tax. In simple words, Sales Tax is basically applicable on the goods and services on the retail price that is the end price whereas VAT on the other hand is applicable on all the stages of production of those goods that is manufacturing stage, distribution stage, wholesale stage, retail stage etc. Unlike VAT, Sales Tax is imposed on the total value of goods and services purchased. The Sales Tax is collected one time by the retailer whereas the Value Added T ax is collected by all the sellers at various stages of production. Although, the burden of tax in both Sales Tax and VAT falls upon the end consumer, however, the payment of these taxes is made by all the purchasers in VAT as compared to singl...

Saudi Arabia has recently announced implementation of value added taxation in the kingdom as an attempt to recover it's depriving economy. The long-awaited tax law is still in its initial stages and has a long journey to cover. The law which is to be implemented from 1st January 2018 is indirect in nature and the burden of taxation would ultimately fall upon the end consumers resulting in increase in prices. This would also result in increased Reserves of the kingdom and reduction in expenditures on luxury items other than goods having inelastic demand. Certain key factors of this law are being elaborated as below. Any resident person who's supplies for the year in actual or estimated is over and above the prescribed threshold is liable to be registered with the authorities as a taxable person. The person should register himself as a taxpayer through the web portal and should submit the relevant documents within 20 days of the application. GAZT has ackno...

So I have been living in Saudi Arabia since October 2016. After spending almost an year I've seen drastic changes being made in policies due to economic turmoil currently being faced by Saudi Arabia due to various factors, including: 1) Decline in international oil prices: and 2) Engaging itself in various conflicts including war in Yemen In order to overcome these economic challenges the Kingdom has come up with a "# Vision 2030 ". This vision 2030 with all its good qualities comes with certain shortcomings. Apparently, the major burden of this vision 2030 falls upon the expatriates coming from abroad. It began with imposition of dependent fees starting from 100 Saudi Riyal which is proposed to gradually increase each year by further 100 Saudi Riyal per dependent. Afterwards, we saw restrictions on employment of expatriates on certain sectors which was specifically and rightfully reserved for the Saudi nationals. However, the drawback of these s...