FBR stops processing advance ruling applications
ISLAMABAD: The Federal Board of Revenue (FBR) has stopped publishing the details of advance rulings issued to the foreign investors since 2018 with growing concerns among non-resident investors over non-processing of advance ruling applications filed with the FBR. Tax experts told Business Recorder that the concerns were growing within the tax and investment community over the apparent…
The Federal Board of Revenue (FBR) has ceased disclosing information about advance rulings granted to foreign investors since 2018, amid mounting frustration from non-resident investors over the delayed processing of such applications. Tax professionals have expressed growing concerns within the tax and investment community regarding the apparent lack of progress in handling advance ruling applications submitted by foreign investors to the FBR.
Despite the introduction of the advance ruling system under section 206A of the Income Tax Ordinance 2001, which aimed to provide clarity and encourage foreign investment, numerous applications have reportedly remained unresolved for extended periods, surpassing the timelines stipulated by law and regulations. The system permits non-resident investors to obtain binding decisions from tax authorities on the tax implications of a proposed transaction before committing to an investment.
According to Rule 231A of the Income Tax Rules 2002, applications must be processed and rulings issued within 90 days of receiving a complete application. However, the reality appears to deviate significantly from this objective. As of the publication date, only ten advance rulings have been issued since the system's inception in 2003, with the most recent ruling issued in April 2018, more than eight years ago.
Given the significance of the regime and the substantial volume of foreign investment transactions conducted over the years, this figure is surprisingly low. This discrepancy between the law and its execution raises doubts about the effectiveness of a crucial investor-attracting provision in the Income Tax Ordinance. This issue becomes particularly pertinent as the government intensifies efforts to attract foreign direct investment, streamline business operations, and ensure tax certainty.
To bolster transparency and restore investor confidence, the FBR should publish comprehensive details of all advance ruling applications on its website. This should include the date of filing, date of decision, and current status of each application, along with aggregate statistics reflecting the number of applications filed, decided, and pending.
Such disclosure would enable an assessment of whether the statutory timelines are being adhered to and would bolster the credibility of Pakistan’s tax certainty framework for foreign investors, according to tax experts.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
