Procedure for obtaining exemption certificate u/s 152

GOVERNMENT OF PAKISTAN
REVENUE DIVISION
FEDERAL BOARD OF REVENUE

Islamabad, the 29th September, 2020.

NOTIFICATION
(Income Tax)

S.R.O. 923 (I)/2020.- In exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Board of Revenue is pleased to direct that the following further amendments shall be made in the Income Tax Rules, 2002, the same having been previously published vide Notification No. S.R.O. 863(I)/2020, dated the 14th September, 2020 as required by sub-section (3) of section 237 of the said Ordinance, namely:-

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 VII(B) 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(C) 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 unless withdrawn by the Commissioner IR earlier.

(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 Parts VII(B) and VII(C) 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

Particulars of Payer (Resident Person 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:
    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 ____________

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

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

Particulars of Transactions

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)