ByThe Federal Board of Revenue (FBR) has suffered a setback in its efforts to tax funds transferred to the Workers Profit Participation Fund (WPPF) by a beverage company.
FBR’s Tax Demand Challenged
The FBR had levied a tax demand on the beverage company, arguing that the amount transferred to the WPPF constituted taxable income.
Tax Tribunal Rules in Favor of Company
The company challenged the FBR’s decision, contending that the WPPF was exempt from taxation under the Companies Profits (Workers Participation) Act, 1968. The tax tribunal upheld the company’s argument, ruling that the funds transferred to the WPPF were indeed exempt from income tax.
Implications of the Ruling
The tribunal’s decision has significant implications for both the FBR and businesses. It clarifies the tax treatment of funds transferred to WPPFs and reinforces the importance of specific legislation in determining tax liabilities.
