KARACHI: The Federal Board of Revenue (FBR) has been granted expanded authority to recover outstanding taxes from resident Associations of Persons (AOP) in cases where a non-resident member of the AOP has pending tax liabilities. This development follows a significant amendment to Section 142 of the Income Tax Ordinance, 2001.
The updated Section 142 outlines detailed mechanisms for recovering taxes due from non-resident members of AOP, effectively shifting some responsibilities to the resident AOP or its members.
Key Provisions of Section 142
Sub-Section (1): Taxes owed by a non-resident member related to their share of the AOP profits can now be assessed in the name of the AOP or any resident member. Recovery may be carried out using the AOP’s assets or directly from a resident member.
Sub-Section (2): To facilitate tax recovery, any person making payments under this provision is deemed to act with the authority of the non-resident member. Such individuals are indemnified against all civil or criminal proceedings and other judicial or extra-judicial processes, offering legal protection during compliance with these provisions.
Sub-Section (3): All amounts due under this section are treated as tax liabilities under an assessment order, ensuring alignment with the broader legal framework for tax recovery.
This amendment significantly strengthens the FBR’s ability to enforce compliance among AOP, especially in cases involving non-resident members. By empowering resident AOPs and their members to fulfill tax liabilities, the FBR aims to close gaps in tax collection and promote accountability within the system.
The inclusion of indemnification provisions under Sub-Section (2) ensures that those acting to recover dues on behalf of non-resident members are safeguarded from legal challenges, streamlining the recovery process.
With these measures, the FBR reinforces its commitment to fostering a transparent tax framework. By holding AOPs accountable for the liabilities of their non-resident members, the FBR underscores its dedication to reducing tax evasion and ensuring compliance with national tax laws.
This amendment reflects a proactive approach by the FBR to refine Pakistan’s taxation system, making it more robust and equitable for all stakeholders involved in the fiscal ecosystem.