Income tax exemption granted to international buying houses

Income tax exemption granted to international buying houses

ISLAMABAD: Federal Board of Revenue (FBR) has said that international buying house act as facilitator for exports from Pakistan to their principals abroad.

“In order to reduce disputes the amount remitted in foreign exchange to meet the expense of these buying houses by their principals has been exempted from tax,” the FBR said while explaining the major changes to Income Tax Ordinance, 2001 through Finance Act, 2021.

Moreover, the salary of non-resident foreign experts employed/ engaged by international buying houses has been exempted from tax if such experts perform duties for these international buying houses. These exemptions have been incorporated in clause (149) of Part I of the Second Schedule to the Ordinance.

According to amended clause 149:

Any sum—

(i) remitted to Pakistan through banking channels in foreign currency received by an international buying house from its non-resident principal to meet its expenses in Pakistan; and

(ii) chargeable under the head “Salary” received by a person who, not being a citizen or resident of Pakistan, is engaged as an expert by an international buying house.

Explanation.—For the purpose of this clause international buying house means persons acting as buying offices, buyers’ agents, or representatives of international buyers for facilitating exports from Pakistan and are registered as liaison offices with Board of Investment or companies registered with SECP. Provided that such buying houses act as cost centers with the sole purpose to bring export orders to Pakistan on behalf of their principals and do not enter into any local business transactions in Pakistan and their expenses are remitted to Pakistan.