ISLAMABAD: Pakistan has amended tax laws to grant approval of legal banking channels for money transfer by money transfer operators and offices.
The country presented the 2022/2023 budget on June 10, 2022 and amended the tax laws to allow the transfer of money made through operators, bureaus and exchange companies.
Through the Finance Bill 2022 amendment to Section 111 of the Income Tax Ordinance 2001. Section 111 is about undeclared money and assets.
An explanation has been offered for subsection 4 of section 111 of the Income Tax Order 2001, which is as follows:
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“Explanation.— For the avoidance of doubt, it is clarified that remittance through money service bureaus, exchange companies or money transfer operators shall be deemed to constitute foreign currency transferred from outside the Pakistan through normal banking channels as provided in this sub-section.”
Previously, the Federal Board of Revenue (FBR) said on September 24, 2021 that tax authorities will not ask for the source of foreign currencies not exceeding 5 million rupees remitted through exchange companies (CE) or foreign exchange companies. money transfer operators.
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The FBR has released an explanation of the Tax Laws (Third Amendment) Order 2021.
The Revenue Authority has stated that Section 111(4) of the Income Tax Ordinance 2001 provides for the exclusion of unexplained income or assets for any amount of foreign currency transferred from outside Pakistan through normal banking channels not exceeding 5 million rupees cashed in rupees by a regular bank.
The amendment by inserting an explanation now also addressed remittances through Money Services Bureaus (MCBs), Exchange Companies (ECs) and Money Transfer Operators (MT0s) or other similar entities such as foreign currency transferred from outside Pakistan through normal banking channels.
After a formal clarification from SBP, Circular n° 05 of 2022 was issued by the Council.
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Thanks to this amendment, the clarification of the FBR is now part of the legislation aimed at facilitating the transfer of funds abroad and bringing the law into line with the innovations that have taken place in the banking sector.
By Circular No. 05 of 2022, the FBR withdrew all appeals relating to the exemption from income tax on transfers of funds abroad.
“In order to gain the confidence of taxpayers and to spare public resources for more productive use elsewhere, all departmental appeals filed on the strict interpretation of the law, be withdrawn immediately, and no further appeals will be filed if the ‘one on all fours of this clarification’, according to the circular.
Additionally, all previously issued circulars and instructions issued on the matter are rescinded, the FBR added.