As a resident Pakistani citizen owning foreign property, it is important to understand the tax implications of such ownership. The taxation of foreign property by a resident Pakistani citizen has been a topic of discussion at various tribunals in Pakistan. In this article, we will explore the different judgments passed by these tribunals and the implications for resident Pakistani taxpayers who own foreign property.
The Appellate Tribunal Inland Revenue Islamabad and Appellate Tribunal Inland Revenue Lahore have passed different judgments on the taxation of foreign property by a resident Pakistani citizen. The Islamabad Tribunal declared that there is no bar in international law on taxing the resident (Pakistan) to tax any of his/her foreign property. However, the Lahore Tribunal annulled the order of the assessing officer pertaining to rental income abroad.
Many resident Pakistani taxpayers with foreign properties in countries like Turkey, Spain, UAE, UK, Canada, and the USA, countries with which Pakistan has tax treaties, have declared the income as exempt, taking refuge in double taxation treaties. However, the Federal Board of Revenue has prevailed in the decision of the Appellate Tribunal Inland Revenue Islamabad, which overrides the decision of the Lahore Tribunal. The owners of properties in other nations are entitled to a tax credit against the taxes paid in the country originating the income. Under the law, the latest judgment on these scenarios prevails when there is a contradiction.
In light of these judgments, resident Pakistani taxpayers who own foreign property should ensure that they comply with tax laws and treaties. They should declare all income from foreign property in their tax returns and claim tax credits for taxes paid in the country where the income originated. Additionally, they should seek professional advice to ensure compliance with all tax laws and regulations.
It is also important to note that Pakistan has entered into tax treaties with various countries, which provide for the avoidance of double taxation and the prevention of tax evasion. These treaties provide relief to taxpayers who are subject to tax in two or more countries on the same income. Resident Pakistani taxpayers who own foreign property should consult these treaties to determine their tax obligations.
In conclusion, the taxation of foreign property by resident Pakistani citizens is a complex issue that requires careful consideration and compliance with tax laws and treaties. The recent judgments by the Appellate Tribunal Inland Revenue Islamabad and Appellate Tribunal Inland Revenue Lahore highlight the importance of seeking professional advice and complying with all tax laws and regulations. As a responsible citizen, it is important to pay taxes and contribute to the development of the country.