Karachi, December 22, 2023 – In a significant development, citizens planning to leave Pakistan permanently will now be required to obtain tax clearance certificates, according to the updated Income Tax Rules for the tax year 2024.
The Federal Board of Revenue (FBR) has outlined the procedures for obtaining these certificates through Rule 221, emphasizing the importance of settling all income tax liabilities or making satisfactory arrangements for payment.
The newly introduced Rule 221 states, “A person leaving Pakistan permanently may apply to the Commissioner for a tax clearance certificate where the person has satisfied all income tax liabilities or has made arrangements to the satisfaction of the Commissioner for payment of income tax liabilities.”
To streamline the process, an official application form has been provided for individuals seeking tax clearance certificates. The form, titled “APPLICATION FOR A CERTIFICATE UNDER SECTION 145 OF THE INCOME TAX ORDINANCE, 2001,” includes essential particulars such as the applicant’s name, domicile, present and home country addresses, nature of business or profession in Pakistan, and details about the applicant’s employers. It also requires information about the place(s) where the business or profession was carried out in Pakistan and the name and address of the last assessing Commissioner.
Notably, the application specifies that it is not applicable to tourists who have earned no income from Pakistan, have entered on a tourist visa, and have stayed for less than 90 days in a tax year.
The FBR has also mandated that the application, particularly under clause (b) of sub-rule (1), must be accompanied by a certificate of guarantee from the applicant’s employer or business associate. This certificate assures that the applicant is an employee or representative of the entity, provides details of the outstanding tax demand, encloses the necessary payment along with the computation of income, and commits to paying any additional tax liability that may be determined later.
This new requirement aims to ensure that individuals leaving the country permanently fulfill their tax obligations, contributing to the overall tax compliance landscape. The measure is expected to prevent tax evasion and enhance revenue collection by closing potential loopholes that could be exploited by those seeking to avoid settling their tax liabilities before departing.
The FBR believes that this rule will not only strengthen the tax system but also promote fairness and equity among citizens by ensuring that everyone contributes their fair share to the nation’s development. The implementation of tax clearance certificates is set to come into effect from the tax year 2024, emphasizing the government’s commitment to fostering fiscal responsibility and accountability among its citizens.
