Tax Legislation Amend Ord, 2021: NRPs are designed to facilitate the opening of NRVAs

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Tax Law Amend Ord, 2021: NRPs are designed to facilitate the opening of NRVAs

ISLAMABAD: The 2021 Tax Law Amending Ordinance would introduce measures to make it easier for non-resident Pakistani residents to open non-resident Pakistani rupee value accounts (NRVAs) and to abolish sales tax on imports of CKD kits for electric vehicles by local manufacturers and remove additional customs duties on imports of electric vehicles by June 30, 2026.

Sources told Business Recorder on Saturday that the Legal Department had reviewed the ordinance that would be enacted after the President signed it.

According to the draft Tax Law Amendment Ordinance 2021, the board would have the authority to share data or information, including real-time data, videos and images, obtained under the Sales Tax Law of 1990 with any other ministry or department of the federal or state government. subject to the restrictions and conditions set by the Board of Directors. The government can exempt sales tax on goods temporarily imported into Pakistan by international athletes or athletes that they would take back within 120 days of the temporary import under the 2021 draft Tax Law Amendment Ordinance. Through the proposed Tax Law Amendment Ordinance 2021, each vehicle registration authority of the excise and tax authority will levy a fee from buyers of locally manufactured vehicles, which they then sell within 90 days of delivery of these vehicles before or after registration at the specified rates Input tax.

Provided that this input tax is not collected after June 30, 2021.

According to the draft Tax Law Amendment Ordinance 2021, each banking company maintains a Foreign Currency Value Account (FCVA) or a Non-Resident Pakistani Rupee Value Account (NRVA) of a non-resident who has a Pakistan Origin Card (POC) or a National Identity Card For Foreign Pakistani (NICOP) or Computerized National Identity Card (CNIC) taxes are deducted from capital gains resulting from the sale of debt and government securities and certificates (including the Shariah-compliant variant) that have been invested through the above accounts at the rates indicated.

By an amendment to Section 236C of the Income Tax Ordinance of 2001 under the Tax Law Amendment Ordinance 2021, if the seller or transferor is a non-resident holding a Pakistan Origin Card (POC) or a Pakistani Foreign National ID Card (NICOP) or is computerized National Identity Card (CNIC) obtained for the sale of real estate through a Foreign Currency Value Account (FCVA) or a Non-Resident Pakistani Rupee Value Account (NRVA) maintained with the approved banks in Pakistan in accordance with the foreign exchange regulations issued by the State Bank of Pakistan which Tax levied under this section is the ultimate exemption from tax liability in lieu of capital gains earned by the seller or transferor from the property so disposed of in accordance with Section 37 of the 2001 Income Tax Ordinance.

If the buyer or transferee is a non-resident who has a Pakistan Origin Card (POC) or Pakistani Foreign National Identity Card (NICOP) or a Computerized National Identity Card (CNIC) who acquired the immovable property through a Foreign Currency Account (FCVA) or a Non-Resident Pakistani Rupee Value Account (NRVA) maintained with the approved banks in Pakistan in accordance with foreign exchange regulations issued by the Pakistani State Bank. The tax levied on these persons under this section is the final exemption from tax liability for such a buyer or transferee, as stated in the draft regulation.

According to the draft of the Tax Law Amendment Ordinance 2021, the tax rate for the sale of fertilizers to traders, traders or wholesalers of fertilizers is 0.25 percent if they are already registered under the Sales Tax Act of 1990 within 60 days of their promulgation or if they are registered under the Tax Law Amendment Ordinance 2021.

According to the draft Tax Law Amendment Ordinance 2021, it is proposed that the tax rate deducted under Section 151 of the Income Tax Ordinance 2001 should be 10 percent of the profit from debt of a debt instrument, whether conventional or Sharia-compliant, issued by the federal government under the Public Debt Act of 1944 or a hundred percent Special Purpose Vehicle purchased by a Pakistani resident who has already reported foreign assets to the Board of Directors through a Foreign Currency Account (FCVA) maintained with authorized banks in Pakistan under the Foreign Exchange Regulations of the State Bank of Pakistan.

Assuming that the tax so assigned is the final tax.

The provisions of Section 100BA and Rule 1 of Annex 10 of the Income Tax Regulations may not apply to non-residents with a Pakistan Origin Card (POC) or Pakistani Foreign National ID Card (NICOP) or Computerized National Identity Card (CNIC) or a Non-Resident Pakistani Rupee Value Account ( NRVA), which is maintained at the approved banks in Pakistan in accordance with the foreign exchange regulations issued by the Pakistani State Bank;

The tax that cotton sellers must pay on their income and profits must not exceed one percent of their turnover in cotton fluff, cottonseed, cottonseed and cottonseed cake, according to the draft regulation.

The provisions of Sections 231A, 231AA and 236P do not apply to holders of the Foreign Currency Value Account (FCVA) and Pakistani Non-Resident Rupee Value Account (NRPRVA) to their accounts only.

The provisions of Section (ae) of Section 114 Subsection 1 and Section 181 of the Income Tax Regulations do not apply to a non-resident holding a Pakistan Origin Card (POC) or a Pakistani Foreign National ID Card (NICOP) Computerized National Identity Card (CNIC) , Foreign Currency Value Account (FCVA), or a Non-Resident Pakistani Rupee Value Account (NRVA) maintained at the approved banks in Pakistan in accordance with foreign exchange regulations issued by the Pakistani State Bank.

Provided that this clause does not apply in certain cases according to the Tax Law Amendment Ordinance of 2021.

The ordinance is expected to waive other taxes already approved by the cabinet to help promote four-wheeled electric vehicles in the country. The cabinet approved the abolition of additional tariffs and three percent additional sales tax on imports of electric vehicles.

Copyright Business Recorder, 2021