Karachi, August 28, 2023 – The Federal Board of Revenue (FBR) took a significant step on Monday by issuing new rules that make it mandatory for corporate entities to declare their beneficial owners.
This move is aimed at enhancing transparency and accountability in the business sector.
The FBR issued SRO 1117(I)/2023, dated August 28, 2023, outlining the rules, which are applicable under Section 181E of the Income Tax Ordinance, 2001. These rules require corporate entities to maintain records of their beneficial owners.
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According to the newly issued rules:
Initial Registration: Every company and association of persons (AOP) must electronically provide the details of its beneficial owners to the FBR upon initial registration. This information should be submitted in the prescribed Form BOF-01 of Part IXA of the First Schedule, using the Board’s online system.
Existing Registrations: Companies and AOPs already registered with the FBR must electronically furnish the particulars of their beneficial owners to the FBR no later than December 31, 2023. This should also be done using Form BOF-01 through the Board’s online system.
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Updates: If there is any change in the particulars of the beneficial owner, as stipulated in Form BOF-01, it must be updated within 30 days from the date of the change.
Non-Profit Organizations: For non-profit organizations defined under Section 2(36) of the Income Tax Ordinance, 2001, the beneficial owners will include the settlor, trustee, founder, promoter, beneficiary, or class of beneficiary, as applicable. However, if the beneficiary or class of beneficiary is the general public, they are exempted from the requirement to provide information about beneficial owners under these rules.
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Confirmation for No Change: If there are no changes in the beneficial owners of a company or AOP throughout a particular tax year, the company or AOP should provide a “Certificate of Confirmation for Beneficial Owner” using Form BOF-02 under Part IXA of the First Schedule. This certificate should be submitted through the Board’s online system along with the income tax return for that tax year.
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These new rules represent a significant step forward in promoting transparency and accountability within corporate entities in Pakistan. By requiring the declaration of beneficial owners, the FBR aims to curb potential misuse of corporate structures and ensure that the true owners and stakeholders of businesses are known and documented. This move aligns with global efforts to combat financial crimes and promote transparency in business dealings.
