ITO-2001 defines resident, non-resident persons

ISLAMABAD: Income Tax Ordinance, 2001 has defined resident and non-resident Pakistan for the purpose of apply rate of income tax on domestic source of income.

The Federal Board of Revenue (FBR) issued ITO 2001 (updated June 30, 2020) and differentiated residents and non-resident Pakistanis.

Various sections of Income Tax Ordinance, 2001 explains the definition:

Section 81. Resident and non-resident persons

Sub-section (1): A person shall be a resident person for a tax year if the person is —

(a) a resident individual, resident company or resident association of persons for the year; or

(b) the Federal Government.

Sub-section (2): A person shall be a non-resident person for a tax year if the person is not a resident person for that year.

Section 82 – Resident individual: — An individual shall be a resident individual for a tax year if the individual —

(a) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and eighty-three days or more in the tax year;

(ab) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and twenty days or more in the tax year and, in the four years preceding the tax year, has been in Pakistan for a period of, or periods amounting in aggregate to, three hundred and sixty-five days or more; or

(c) is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year.

Section 83 – Resident company: A company shall be a resident company for a tax year if —

(a) it is incorporated or formed by or under any law in force in Pakistan;

(b) the control and management of the affairs of the company is situated wholly in Pakistan at any time in the year; or

(c) it is a Provincial Government or Local Government in Pakistan.

Section 84 – Resident association of persons: — An association of persons shall be a resident association of persons for a tax year if the control and management of the affairs of the association is situated wholly or partly in Pakistan at any time in the year.

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