Pakistan Directs Citizens to Declare Foreign Income and Assets for Tax Year 2023

Pakistan Directs Citizens to Declare Foreign Income and Assets for Tax Year 2023

Karachi, September 28, 2023 – In a move aimed at enhancing transparency and compliance with tax regulations, Pakistan has issued a directive requiring its citizens to declare foreign income and assets as part of their annual tax return for the year 2023.

Sources within the Federal Board of Revenue (FBR) confirmed on Thursday that this new requirement has been put in place to ensure that individuals report any foreign income exceeding $10,000 per year. The legal framework for this provision is already established in the country’s tax laws.

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According to FBR sources, every resident taxpayer who is an individual and has foreign income exceeding ten thousand United States dollars or possesses foreign assets valued at one hundred thousand United States dollars or more is obligated to submit a “foreign income and assets statement.” This statement must be filed in the prescribed format and verified according to the prescribed procedures. It should provide detailed information, including:

(a) The individual’s total foreign assets and liabilities as of the last day of the tax year.

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(b) Any foreign assets that the individual transferred to another person during the tax year, including the consideration for the transfer.

(c) Comprehensive particulars of foreign income, the associated expenditures earned during the tax year, and the expenses directly and necessarily incurred for generating that income.

Furthermore, the Commissioner of Inland Revenue is empowered to issue written notices to individuals who, in their judgment, are required to submit a foreign income and assets statement but have failed to do so. These notices will specify a deadline by which the statement must be furnished.

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This directive is part of Pakistan’s efforts to strengthen its tax collection mechanisms and ensure that all eligible income and assets, including those generated or held abroad, are properly accounted for in the national tax system. It aligns with global initiatives to combat tax evasion and promote fiscal transparency.

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Citizens and taxpayers are encouraged to familiarize themselves with these new requirements and comply with them to avoid potential penalties or legal consequences. The FBR is expected to provide further guidance and support to facilitate the declaration of foreign income and assets during the tax filing process.