The apex court of Pakistan has suspended the order of the higher court related to tax notices to Pakistanis for their overseas assets.
In a recent development, the Supreme Court of Pakistan (SCP) has suspended the order of the Sindh High Court (SHC) pertaining to the issuance of tax notices by the Federal Board of Revenue (FBR) to Pakistani citizens regarding their overseas assets. The decision was made during a hearing on Tuesday, granting leave to appeal and accepting FBR’s plea for a hearing.
The SCP’s move comes after the SHC had declared FBR’s notices null and void, terming them illegal in December 2020. The SHC’s decision prompted individuals who received these notices to file appeals against the FBR, arguing that the notices were in violation of the law.
According to a statement issued by the FBR, the SCP has suspended the SHC’s order on the issuance of notices related to overseas assets, income, and expenses. The FBR highlighted that, in accordance with the Income Tax Ordinance-2001, all Pakistanis with assets or income abroad are obliged to declare such assets, income, and expenses along with their annual returns. The notices were issued to individuals who had foreign source income or assets abroad but had not declared them in their Income Tax Returns.
During the hearing, the lawyer representing the FBR explained that the notices were issued to ensure compliance with the legal provisions outlined in the Income Tax Ordinance-2001. Individuals who received these notices challenged them in the Sindh High Court, seeking a declaration that the notices were illegal.
The Supreme Court, in accepting the plea for hearing the appeal, emphasized that notices issued by the FBR could not be challenged before the High Court as per established legal principles. This decision reaffirms the Apex Court’s stance on the matter, highlighting the specific legal avenue for challenging tax-related notices.
The suspension of the SHC’s order implies a temporary halt to its previous ruling nullifying the FBR’s notices. This development underscores the complexity and legal intricacies surrounding the taxation of overseas assets and income, with the Supreme Court providing clarity on the proper legal course for addressing such matters.
As the legal proceedings unfold, it is anticipated that this case will have broader implications for the taxation framework in Pakistan, particularly concerning the reporting and disclosure requirements for overseas assets and income. The Supreme Court’s decision to hear the appeal signifies a pivotal juncture in resolving the dispute and ensuring consistency in the application of tax laws in the country.
