ISLAMABAD: The former Federal Board of Revenue (FBR) chairman Syed Shabbar Zaidi has said that the tax department has sent a wrong notice to the National Accountability Bureau (NAB) in connection with the Broadsheet payments.
“Income chargeable to tax in Pakistan. Officer and professionals to read Section 101 of the Income Tax Ordinance, 2001 and UK/Pakistan Tax Treaty,” Zaidi said on Twitter.
The former FBR chairman said that “amateurish comments” are diverting attention from “the main issue” and expressed that no “withholding” was required.
“Notice is wrong,” he stated on the popular micro-blogging site.
It is pertinent to mention here that the FBR has served a notice to NAB in connection with the payment to Broadsheet.
Reportedly, the department stated in its notice that NAB did not deduct 15 per cent withholding tax while paying $28.7 million as damages in Broadsheet case. The FBR has sent a notice to pay Rs60.9 million.
The notice was reportedly sent to the NAB headquarters on behalf of International Tax Department of FBR under Section 152 of FBR Ordinance.
Section 101 of Income Tax Ordinance 2001 pertains to the geographical source of income, wherein the business of a non-resident comprises the rendering of independent services –including professional services and the services of entertainers and sports persons – Pakistan-source business income of the person shall include any remuneration derived by the person where the remuneration is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
Every person paying an amount of royalty or fees for technical services to a non-resident person that is chargeable to tax under section 6 shall deduct tax from the gross amount paid at the rate specified in Division IV of Part I of the First Schedule.
Every person making a payment in full or part, including payment by way of advance, to a non-resident person on the execution of a contract or sub-contract under a construction, assembly or installation project in Pakistan, including a contract for the supply of supervisory activities in relation to such project.
The provision (1B) states the tax deducted under sub-section (1A) shall be a final tax on the income of a non-resident person arising from a contract.
Similarly, subject to sub-section (3), every person paying an amount to a non-resident person (other than an amount to which sub-section (1) or sub-section (1A) applies) shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.
