The Federal Board of Revenue (FBR) has proposed a digital tax return system for non-resident ship owners, charterers and shipping agents operating in Pakistan. The proposed framework would integrate the FBR’s IRIS system with the Pakistan Single Window (PSW) to automate tax return filing, payment tracking and verification of tax compliance before vessel clearance.
The proposal seeks to replace Rule 37 of the Income Tax Rules, 2002, relating to returns filed under Section 143 of the Income Tax Ordinance, 2001.
Key Features of the Proposed System
1. Automated Tax Return Generation
IRIS would automatically generate an electronic tax return based on vessel information received from PSW through a Vessel Intimation Report (VIR).
2. Electronic Tax Payment Tracking
Tax payments made through Payment Slip Identification Numbers (PSIDs) and corresponding Computerised Payment Receipts (CPRs) would be linked electronically to the relevant vessel and tax return.
3. Tax Payment Before Return Submission
Under the draft framework, a return would remain pending until all required tax payments were made and the corresponding payment receipts were linked to the return.
4. Extension Applications and Security
Applicants seeking an extension under Section 143 would need to apply before the vessel’s departure, provide supporting voyage documents and furnish security equivalent to the estimated tax liability.
5. Customs Clearance Verification
Once the return is filed and tax paid, or an extension is approved, IRIS would transmit confirmation to PSW for use by the relevant Customs authorities.
What Does This Mean for Shipping Businesses?
The proposed system would increase reliance on digital documentation, accurate voyage information and timely tax payments. Non-resident ship owners, charterers and shipping agents should ensure that freight records, bills of lading, cargo manifests, charter agreements and payment details are properly maintained.
As the rules remain proposed, affected businesses should confirm their final status and applicable requirements before taking action.
How Xact Legal Can Help
Xact Legal supports businesses with tax compliance, tax documentation and guidance on Pakistan’s tax regulations. Our team can help shipping businesses and their representatives understand filing obligations, prepare supporting records and navigate tax-related compliance requirements.
Contact Xact Legal for professional tax guidance for shipping operations in Pakistan.