Karachi, December 17, 2023 – Pakistan has enforced stringent requirements for companies and Associations of Persons (AOPs) to furnish detailed information about beneficial owners.
The new regulations, mandated under the country’s tax laws, have been implemented by the Federal Board of Revenue (FBR), the apex tax agency of Pakistan.
The FBR, in its bid to enhance regulatory oversight, has issued updated Income Tax Rules, 2002 for the current tax year, explicitly detailing the obligations of companies and AOPs regarding the disclosure of beneficial ownership information. These rules aim to provide a comprehensive understanding of the ultimate beneficiaries behind corporate entities and associations.
Under Rule 83A of the Income Tax Rules, 2002, every company and AOP, upon initial registration with the FBR, is now required to electronically submit particulars of its beneficial owners as outlined in Form BOF-01 of Part IXA of the First Schedule to these rules through the Board’s online system. For entities already registered, this information must be submitted by December 31, 2023, and updated within 30 days of any changes in beneficial ownership.
The FBR emphasizes that non-profit organizations, as defined under section 2(36) of the Income Tax Ordinance, 2001, will have their settlor, trustee, founder, promoter, beneficiary, or class of beneficiaries considered as beneficial owners. However, if the beneficiary or class of beneficiaries comprises the general public, they are exempted from the requirement to disclose beneficial ownership information.
For companies or AOPs with unchanged beneficial owners throughout a tax year, a “Certificate of Confirmation for Beneficial Owner” must be furnished along with the Income Tax return for that year.
The detailed requirements for disclosing beneficial ownership include various scenarios, such as direct ownership of 25% or more, ownership through a chain, joint control arrangements, voting rights, contractual associations, personal or family connections, and senior managerial positions. The particulars demanded include names, familial relations, dates of birth, nationality, identification numbers, percentage of ownership, dates of acquisition, and residential and commercial addresses.
These measures aim to curb potential avenues for money laundering, tax evasion, and other illicit financial activities by ensuring greater accountability and traceability of funds. The FBR expects these regulations to fortify the country’s regulatory framework, aligning it with global best practices for financial transparency and accountability.
As Pakistan takes these proactive steps toward enhancing financial scrutiny, the business community is urged to comply with the new regulations to promote a more transparent and accountable economic environment.
