Karachi, November 23, 2024 – The Federal Board of Revenue (FBR) has clarified the provisions regarding offences committed by companies and Associations of Persons (AOPs) under the Income Tax Ordinance, 2001. These offences are detailed in Section 200 of the Ordinance, which outlines the responsibilities and liabilities of individuals associated with such entities when a violation occurs.
Under Sub-Section (1) of Section 200, if a company commits an offence under this part of the Ordinance, specific individuals within the organization may be held accountable. These include:
(a) the principal officer, director, general manager, company secretary, or other similar officials; and
(b) anyone acting or appearing to act in such a capacity at the time of the offence.
Regardless of any provisions in other laws, these individuals are considered guilty of the offence, and all applicable provisions of the Ordinance apply to them.
For AOPs, Sub-Section (2) states that when an offence is committed, every member of the association at the time of the violation is deemed guilty. Similar to companies, this liability is imposed regardless of any other legal provisions, ensuring that all relevant sections of the Ordinance are enforced against the individuals involved.
However, Sub-Section (3) provides certain protections for individuals who can demonstrate that:
(a) the offence was committed without their consent or knowledge; and
(b) they exercised due diligence to prevent the offence, considering their role and the circumstances.
This clarification emphasizes that accountability under the law is not limited to organizations but extends to individuals in leadership or decision-making roles. The FBR aims to promote transparency and strict adherence to tax laws, urging businesses to strengthen internal controls and compliance measures. Awareness of these provisions can help entities avoid unintended legal consequences and improve overall governance.
Note: the details provided in this article is based on information in the Income Tax Ordinance, 2001. Taxpayers advised to consult their tax advisors or visit the official website of the FBR.