The three SROs discussed in the tax bulletin are related to the Income Tax Ordinance, 2001 in Pakistan.

The first SRO, SRO 213(I)/2023, dated February 22, 2023, provides an exemption to non-resident banking companies from paying tax on profit earned from debt and capital gains on debt and debt instruments. This exemption is provided by inserting sub-rule 4 under rule 8 of the Seventh Schedule to the Income Tax Ordinance, 2001. The exemption is applicable to debt and debt instruments approved by the Federal Government for the purpose of this sub-rule. It is worth mentioning that non-resident persons already enjoy exemption in respect of profit on debt from debt and debt instruments under clause (75) of Part I of the Second Schedule to the Ordinance.

The second SRO, SRO 226(I)/2023, dated February 27, 2023, amends rule 8 of the Seventh Schedule to the Income Tax Ordinance, 2001. It provides that enhanced tax rates for taxable income attributable to investment in Federal Government securities under sub-rule 6A of Rule 6C will not apply to a banking company for tax year 2024. Sub rule 6A of Rule 6C of the Seventh Schedule to the Ordinance provides for enhanced tax rates up to 55% in respect of income attributable to investment in Federal Government securities.

The third SRO, SRO 229(I)/2023, dated February 28, 2023, introduces rules for submission of the record of beneficial owners for the purpose of section 181E of the Income Tax Ordinance, 2001. This section was introduced through the Finance Act, 2022, through which companies and AOPs are required to furnish to the FBR (Federal Board of Revenue) record of their beneficial owners in the prescribed form and manner. The subject SRO prescribes the manner of submission of the record, timeline to notify a change if there is any, important definitions, and particulars of the record to be furnished. The rules provide a timeline for the submission of beneficial ownership record, according to which every company and AOP, on its initial registration with FBR, shall electronically furnish the particulars of its beneficial owners to the Board as prescribed in Form (BOF-01) of Part IXA of the First Schedule to these rules through FBR’s online system. Moreover, every company and AOP already registered with FBR shall electronically furnish the particulars of its beneficial owners to the Board on or before December 31, 2023, as prescribed in Form (BOF-01) of Part IXA of the First Schedule to these rules through FBR’s online system.