KARACHI: The Federal Board of Revenue (FBR) has been granted enhanced powers to recover outstanding taxes from resident Associations of Persons (AOP) in cases where a non-resident, who is a member of such an AOP, has pending tax liabilities.
The recent update to the Income Tax Ordinance of 2001 by the FBR includes a comprehensive amendment to Section 142, elucidating the mechanisms for the recovery of taxes due from non-resident members of associations of persons.
Section 142: Recovery of Tax Due by Non-Resident Member of an Association of Persons
Sub-Section (1): The tax due by a non-resident member of an association of persons concerning the member’s share of the profits of the association shall be assessable in the name of the association or any resident member of the association. Furthermore, this tax may be recovered from the assets of the association or directly from the resident member personally.
Sub-Section (2): Any person making a payment under the provisions of this section shall be considered as acting under the authority of the non-resident member. This individual is hereby indemnified in respect of the payment against all proceedings, whether civil or criminal, and all processes, whether judicial or extra-judicial. This indemnification holds true notwithstanding any provisions to the contrary in any written law, contract, or agreement.
Sub-Section (3): The provisions outlined in this Ordinance shall be applicable to any amount due under this section as if it were tax due under an assessment order, streamlining the legal framework for the recovery process.
This amendment reinforces the FBR’s commitment to ensuring the comprehensive and effective recovery of taxes, particularly in cases involving non-resident members of associations of persons. By extending the recovery authority to resident associations and members, the FBR aims to bolster its efforts in maintaining tax compliance and addressing outstanding liabilities within the tax framework.
The inclusion of indemnification provisions in Sub-Section (2) seeks to provide legal protection to individuals making payments under the authority of non-resident members, shielding them from potential legal repercussions. This indemnification extends to both civil and criminal proceedings, as well as judicial and extra-judicial processes, offering a layer of legal security in the tax recovery process.
In essence, the amended Section 142 serves as a robust legal instrument empowering the FBR to pursue the recovery of taxes owed by non-resident members of associations of persons, thereby promoting accountability and adherence to tax regulations. The implications of this amendment underscore the FBR’s ongoing efforts to refine and strengthen the taxation framework in Pakistan, fostering a more transparent and accountable fiscal environment.
