FBR changes definition of resident Pakistani

ISLAMABAD: The FBR has brought changes in the definition of a resident of Pakistan and declared that any individual shall be required to be in Pakistan for a period in aggregate to 183 days or more, in a tax year to become a resident.

The Finance Act 2019 broadened the definition of a resident person as previously it had treated anyone a resident who remained in Pakistan for 120 days during the tax year and who was also present in Pakistan for a cumulative 365 days during the preceding 4 years as a resident individual.

Now the Finance Act 2021-22 has withdrawn this condition. In the change, in order to determine the residential status of an individual, the number of days in Pakistan will only be counted, of the current year (i.e. the person will be resident if he stays for 183 days or more in Pakistan during that year).

On Thursday, the FBR issued an explanation changing the definition of a resident individual, “requiring a person to be in Pakistan for a period in aggregate to 183 days or more in a tax year to become a resident."

The provisions relating to the definition of resident individual have been modified. Now to become a resident, a person shall be required to be in Pakistan for 183 days or more in a tax year.

The other conditions have been waived off by omitting clause (ab) of Section 82 of the Income Tax Ordinance 2001, the FBR added. Pakistan has been signatory to many international bilateral and multilateral tax treaties and agreements.

However, the law did not provide legal cover to recovery of taxes on the request of foreign jurisdiction. In order to cater to this, enabling provisions have been introduced by amending Section 107 and introducing new Section 146 of the ordinance.