Procedure for obtaining exemption certificate u/s 152

Government of Pakistan
(Revenue Division)
Federal Board of Revenue

Islamabad, the 14th September, 2020.

NOTIFICATION
(Income Tax)

S.R.O. 863(I)/2020.- The following draft of certain further amendments in the Income Tax Rules, 2002, which the Federal Board of Revenue proposes to make in exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance, 2001 (XLIX of 2001), is hereby published for information of all persons likely to be affected thereby and, as required by sub-section (3) of the said section 237, notice is hereby given that objections or suggestions thereon, if any, may for consideration of the Federal Board of Revenue be sent within seven days of publication of the draft in the official Gazette. Objections or suggestions which may be received from any person in respect of the said draft, before the expiry of the aforesaid period, shall be considered by the Federal Board of Revenue, namely:-

DRAFT AMENDMENT

In the aforesaid Rules,-

(a) in Chapter IX, after Part IA, the following new Part shall be inserted, namely:-

"PART IAA
EXEMPTION UNDER SECTION 152

40FA. Exemption or lower rate certificate under sections 152 and 159 to non-resident persons or permanent establishment of non-resident person.- (1) Notwithstanding rule 40(1) and Part VII of the First Schedule to these rules, an online application by a non-resident person or a PE of a non-resident person for a certificate under sub-section (1) of section 159 shall be made in the form specified in Part VIIA of the First Schedule to these rules, duly furnishing therewith all the requisite information and documents.

(2) An online application or notice for a certificate under sub-section (4B) of section 152 and sub-section (5) of section 152 shall be made by a payer

in the form specified in Part VII(B) of the First Schedule to these rules, duly furnishing therewith all the requisite information and documents.

(3) An exemption certificate or a reduced rate certificate shall be issued to the non-resident person or PE of a non-resident person only if the Commissioner Inland Revenue is satisfied that the applicant-

(i) has furnished return or returns of income when became due, if any, on or before the date on which the application or notice is made, and

(ii) is not in default or deemed to be in default in respect of any tax (including penalties, default surcharge, advance tax under section 147 or tax payable under section 137) unless the same is stayed by Commission-IR, Commissioner-IR (Appeal), Appellate Tribunal Inland Revenue, High Court, Supreme Court or any other statutory body under the Income Tax Ordinance, 2001 (XLIX of 2001).

(4) The non-resident person or PE of a non-resident person shall file an affidavit to the effect that neither its withholding agent (payer) has filed application or notice for exemption or reduced rate certificate nor payer's application or notice has been rejected. In case of misrepresentation, issued exemption or reduced rate certificate shall be cancelled forthwith.

(5) The resident person or PE of a non-resident person shall file an affidavit that neither the payee (non-resident person and PE of a non-resident person) has filed application or notice for exemption or reduced rate certificate nor has it been rejected. In case of misrepresentation, issued exemption or reduced rate certificate shall be cancelled forthwith.

(6) The applicant shall provide the details of all the contracts made for the sale of goods, rendering or providing of services or for execution of contract in Pakistan.

(7) The Commissioner Inland Revenue may call for information, documents, record in respect of matters arising during the proceedings under section 152(4B), 152(5) or 159(1) of the Ordinance or cause further enquiry including but not limited to cohesive business operation.

(8) The Commissioner Inland Revenue may call for any information, documents, record from any person in connection with the application in order to determine that the amount is chargeable to tax being Pakistan -source income under the Ordinance.

(9) The Commissioner Inland Revenue shall, after providing an opportunity of being heard, pass an order within thirty days of receipt of application. However, any period adjourned at the request of the applicant or is postponed due to any proceedings, stay order, alternative dispute resolution proceedings or for any other reason, shall be excluded in the computation of the aforementioned period.

(10) The Commissioner Inland Revenue shall afford an opportunity of being heard to the applicant and, in case of default on the date of hearing, he may proceed ex parte to decide the application on the basis of the available record.

(11) The certificate shall be valid for the period as allowed by the Commissioner IR.

(12) The Commissioner Inland Revenue shall keep and maintain all record, inter-alia, encompassing the application and notice, necessary enclosures and annexure and the orders passed."."

(b) in the First Schedule, after Part VII(A), the following new Part VII(B) shall be added, namely:-

"PART-VII(B)
[see rule 40 FA]

Federal Board of Revenue
Form for Exemption/Reduced Rate on Receipt of Payments by a Non-Resident Person or PE of a Non-Resident Person
Note: Please Fill all the Fields

General

1. NTN: ____ Name of Payee: ____ EDN No.: N°
2. Office (LTU/RTO): ____ 3. Tax Year: ____ 4. Date of Application: ____
3. Commissioner IRS:
   (i) Name: ____
   (ii) Zone: ____
4. Nature of payment (Business, Dividend, Interest, Royalties, FTS etc.): ____
5. (i) Currency: ____ (ii) Amount Due for Receipt: ____
6. Affidavit that neither Withholding Agent (Payer i.e. resident person or PE of a non-resident person) has filed Application/Notice for Exemption/Reduced Rate Certificate nor it has been rejected. ____

Particulars of payee/Recipient (Non Resident Person or PE of Non Resident Person)

8. Status of the Payee (Non-Resident / PE of Non-Resident) : ____
9. Non-Resident Person (Company, Individual, Firm/AOP/Trust): ____

Contact Details:
i) Address: ____
ii) Tel: ____ iii) Fax: ____
iv) E-mail: ____ v) Website: ____
vi) CNIC/ Passport No. (if individual) ____ vii) STRN: ____
viii) Incorporation # (if Company) ____ ix) Incorporation Date (if Company) ____
x) Registration # (If Firm/AOP/Trust) ____ xi) Registration Date: ____
xii) TIN ____
xiii) Whether PE in Pakistan or not (Yes or No) ____

10. PE of Non-Resident Person in Pakistan:
    i) STRN: ____
    ii) BOI/EAD's Permission No: ____ iii) Date: ____
    iv) Residence Country: ____ v) Main Business: ____
    vi) Status in Home Country (Corporate, Non Corporate, Individual): ____
    vii) Contact Detail:
    a) Address: ____
    b) Tel: ____ c) Fax: ____
    d) Email: ____ e) Website: ____
    f) Inc./Reg. # ____ g) Inc./Reg. Date ____

11. Bank Details of Non-Resident Person or PE of Non-Resident Person and Receipt of Payments Details:
    i) Bank Account Details (where amount is finally destined to land)
    a) A/C# ____ b) Bank Name ____
    c) Branch Address: ____
    ii) Currency: ____ Total Amount received from the payer under the head during the year ____
    iii) Currency: ____ Total Amount received from the payer during the year: ____
    iv) Certificate of Residence: ____ copy attached

[illegible]on or PE of Non-Resident Person)

12. Status of the Payer (Resident / PE of Non Resident) : ____
13. Resident Person (Company, Individual, Firm/AOP/Trust/GOP): ____

Contact Details:
i) Address: ____
ii) Tel: ____ iii) Fax: ____
iv) E-mail: ____ v) Website: ____
vi) NTN: ____ vii) STRN: ____
viii) CNIC No. (if individual) ____
ix) Incorporation # (if Company) ____ x) Incorporation Date (if Company) ____
xi) Registration # (If Firm/AOP/Trust/GOP) ____ xii) Registration Date: ____

14. PE of Non-Resident Person in Pakistan:
    i) NTN: ____ ii) STRN: ____

Particulars of Payer (Resident Per[illegible]

iii) BOI/EAD's Permission No: ____ iv) Date: ____
v) Residence Country: ____ vi) Main Business: ____
vii) Status in Home Country (Corporate, Non Corporate, Individual): ____
viii) Contact Detail:
a) Address: ____
b) Tel: ____ c) Fax: ____
d) Email: ____ e) Website: ____
f) Inc./Reg. # ____ g) Inc./Reg. Date ____

15. Bank Details of Payer (Resident Person or PE of Non-Resident Person) from where payment is received:
    i) Bank Account Details:
    a) A/C # ____ b) Bank Name ____
    c) Branch Address:

Particulars of Transactions

16. Is the contract one-time or going (Y/N)? ____
17. Nature of Contract? (What gives rise to the payments): ____

Basis of Exemptions

18. Is the Claim based on an Agreement for the Avoidance of Double Taxation (ADTA)? ____
19. Country: ____
20. Applicable Article / Paragraph: ____
21. Other supporting Arguments? (Please make out your case for exemption by making cogent arguments duly supported by legal provisions / data and documents) ____

Attachments:
Affidavit
Certificate of Residence
Copy of Contract/Agreement
Copy of Invioce
Any other document/information

I hereby declare that whatever stated above in this application is correct. It is further declared that all the attachments/ relevant documents/information are enclosed in entirity.

Signature ____
Name ____
Address ____
Date ____

Federal Board of Revenue
Form for Exemption/Reduced Rate on Payments to Non-Resident Person
Note: Please Fill all the Fields.

General

1. NTN: ____ Name of Payer: ____ EDN No.: N°
2. Office (LTU/RTO): ____ 3. Tax Year: ____ 4. Date of Application: ____
3. Commissioner IRS:
   (i) Name: ____
   (ii) Zone: ____
4. Nature of payment (Business, Dividend, Interest, Royalties, FTS etc.): ____
5. (i) Currency: ____ (ii) Amount Due for Payment: ____
6. Affidavit that neither Payee (non-resident person or PE of a non-resident person) has filed Application/Notice for Exemption/Reduced Rate Certificate nor it has been rejected ____

Particulars of Payer (Resident Person or PE of Non-Resident Person)

8. Status of the Payer (Resident / PE of Non-Resident) : ____
9. Resident person (Company, Individual, Firm/AOP/Trust/GOP): ____

Contact Details:
i) Address: ____
ii) Tel: ____ iii) Fax: ____
iv) E-mail: ____ v) Website: ____
vi) NTN: ____ vii) STRN: ____
viii) CNIC No. (if individual) ____
ix) Incorporation # (if Company) ____ x) Incorporation Date (if Company) ____
xi) Registration # (If Firm/AOP/Trust/GOP) ____ xii) Registration Date: ____

10. PE of Non-Resident Person In Pakistan:
    i) NTN: ____ ii) STRN: ____
    iii) BOI/EAD's Permission No: ____ iv) Date: ____
    v) Residence Country: ____ vi) Main Business: ____
    vii) Status in Home Country (Corporate, Non Corporate, Individual): ____
    viii) Contact Detail:
    a) Address: ____
    b) Tel: ____ c) Fax: ____
    d) Email: ____ e) Website: ____
    f) Inc./Reg. # ____ g) Inc./Reg. Date: ____

11. Bank Details of Resident Person or PE of Non-Resident Person and Payment Details:
    i) Bank Account Details (From where payment is made)
    a) A/C# ____ b) Bank Name ____
    c) Branch Address: ____
    ii) Total Payment made to the payee Under the head during the year: ____
    iii) Total Payment to the payee made during the year: ____

Particulars of Payee / Recipient (Non-Resident Person)

12. Category of Non-Resident Person (Company, Individual, Firm/AOP/Trust) ____

Contact Detail:
i) Name: ____
ii) Address: ____
iii) Country ____
iv) Tel: ____ v) Fax: ____
vi) E-mail: ____ vii) Website ____
viii) Incorporation # (if Company) ____ ix) Incorporation Date (If Company) ____
x) Registration # (if Firm/AOP/Trust) ____
xi) Registration Date (if Firm/AOP/Trust) ____
xii) Bank Account Details of Non-Resident Person (where amount is finally destined to land)
a) A/C# ____ b) Bank Name ____
c) Branch Address: ____
d) Tel: ____ e) Country: ____
xiii) Certificate of Residence: ____ copy attached
XIV) TIN ____

[illegible]rticulars of [illegible]ansactions

13. Is the contract one-time or going (Y/N)? ____
14. Nature of Contract? (What gives rise to the payments): ____
    (Attach copy of contract / agreement)

Basis of Exemptions

15. Is the Claim based on an Agreement for the Avoidance of Double Taxation (ADTA)? ____
16. Country: ____
17. Applicable Article / Paragraph: ____
18. Other supporting Arguments? (Please make out your case for exemption by making cogent arguments duly supported by legal provisions / data and documents) ____

Attachments:
1 Affidavit
2 Certificate of Residence
3 Copy of Contract/Agreement
4 Copy of Invioce
5 Any other document/information

I hereby declare that whatever stated above in this application is correct. It is further declared that all the attachments/ relevant documents/information are enclosed in entirity.

Signature ____
Name ____
Address ____
Date ____ ".

[F.No.1(66)R&S/2020]

(Syed Hassan Sardar)
Secretary (Rules &SROs)