Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Incomes / Expenses & Withholdings > Withholding-NR-S152 > Flashcards

Withholding-NR-S152 Flashcards

1
Q

How is N/R taxed wrt

Residency status

OR

Source

A

Mixture

RP———-> PSI+FSI (Residence Principle)

NRP————————>PSI (Source Principle)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Resident——-Residence or Source??

Non-Resident——-Residence or Source??

A

Resident——–Both

Non-Resident——-Source basis (as ITO has effect in Pakistan only)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are two ways of taxation of N/R’s income (or income sources)

& Which Regime do they fall (generally)

A
  1. Has fixed place of business in Pakistan? Yes PE PE becomes person taxation in S105 PE Income from Business NTR
  2. Does not have fixed place of business? No S6 (&S7), S8, S152 Withholding from Income FTR NTR MTR
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Does N/R’s Fixed Place of Business means building?

Can service provision/provider be fixed place of Business

A

Fixed Place means (generally, specifically defined in ITO)

Even a hair-dresser on roadside - Chair a PE

Service provider - Service based PE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

N/R Taxation Sections

A

S 44 exemptions under International Treaties

S 107 DTT

S 6&7 Charging sections

S 8 Regime

S 152 Withholding

S105 PE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Rtaes

A

S6 - FFTS/Royalty 15%

S6 - FFODS 5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When does S6 (FFTS/Royalty/FODS earned by NR) does not apply

A
  1. NR has PE & services provided by PE of NR
  2. NR has PE & income related property (asset) owned by PE of NR
  3. Exmpt under Ordinance
  4. Exempt under DTT
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Royalty/FFTS/FFODS

Regime??

A

NR has PE - S105 NTR

NR has no PE - S8 FTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is regime for NR’s

below

SERVICES

construction, assembly or installation, supervisory activitiesof project

A

MTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is regime for NR’s

below

SERVICES

advertisement on

TV

A

MTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is regime for NR’s

below

SERVICES

insurance premium or re-insurance premium

A

MTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is regime for NR’s

below

SERVICES

advertisement services (general, any medium)

A

MTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is regime for NR’s

below

CAPITAL GAIN

of a non-resident company having (no permanent establishment in Pakistan)

arising on the disposal of debt instruments and Government securities including treasury bills and Pakistan investment bonds (invested through SCRA)

A

FTR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Are there any payments to NR where WHA is not payer

&

who is WHA in those cases

A

FFODS & Capital gain (Govt securities through NR Rs A/C)

BC/FI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What about other transactions (not specifically defined in 152)

Other than

Royalty, FFTS,FFODS,CAI & Supervisory serv, Advertisement TV/Other, Insurance/Re-ins/Capital gain

like PoD, etc

A

NTR with 20% rate

except

Salary

Commission

dividend

Prizes & Winnings

For these 4 relevant sections will be applied/referred to for NR’s Taxation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Are there any exclsuions / exceptions available to N/R

i.e.

No deduction on payments to N/R

A

Exclusions from sub-Sec 2 of S152 (in other words exclusions from Sec 152 as (2) of 152 covers all transactions to NR other than specifically mentioned)

  • Deductions covered u/other Sections; Salary, dividend, prizes & winnings, commission payments
  • Amounts taxable to PE (received by NR through PE), with Comm. Approval
  • Representative (of NR, sec 172) e.g foreign actors/singers’ representative etc
  • N/R not chargeable to tax e.g under DTT or under ITO

Exclusions from sub-Sec 2 of S152 (in other words exclusions from Sec 152 as (2) of 152 covers all transactions to NR other than specifically mentioned)

  • Deductions covered u/other Sections; Salary, dividend, prizes & winnings, commission payments
  • Amounts taxable to PE (received by NR through PE), with Comm. Approval
  • Representative (of NR, sec 172) e.g foreign actors/singers’ representative etc
  • N/R not chargeable to tax e.g under DTT or under ITO
17
Q

Are there any payment to NR where

No tax deduction required

&

No need to intimate (send notice) to comissioner

A
  1. import of goods where title to the goods passes outside Pakistan and is not part of Cohesive arrangement
  2. educational and medical expenses remitted in accordance with the regulations of the State Bank of Pakistan
18
Q

When to take comissioner’s approval?

When to apply tax even if title passes outside Pakistan?

A

Payer thinks payment to NR is not subject to tax?

When supply part of overall arrangement or Supply by local person/PE

Import of goods whether or not title passes outside Pakistan;whether or not tilte passes in the name of associate/PE (when part of overall arrangement)

19
Q

When to give notice (intimate) comissioner in connection with NR payment (foreign payment)

Subsec 5

A

Where payer wants to make payment without deduction of tax (e.g exclusions from 152 like exempt u/DTT or exempt u/ITO)

(5) Where a person intends to make a payment to a non-resident person without deduction of tax under this section, other than payments liable to reduced rate under relevant agreement for avoidance of double taxation,] the person shall, before making the payment, furnish to the Commissioner a notice in writing setting out -
(a) the name and address of the non-resident person;
(b) the nature and amount of the payment and
(c) such other particulars as may be prescribed.

The Commissioner on receipt of notice shall, within thirty days, pass an order accepting the contention or making the order under sub-section.

Where a person has notified the Commissioner of a payment under sub-section (5) and the Commissioner has reasonable grounds to believe that the non-resident person is chargeable to tax under this Ordinance in respect of the payment, the Commissioner may, by order in writing, direct the person making the payment to deduct tax from the payment in accordance with sub-section (2).

20
Q

When can be 80% reduction in withholding Tax amount on Payment to NR (Foreign Payment)

80% reduction on tax amount

A
  1. Payment related to sub sec 1A i.e. construction assembly installation Supervisery
  2. Payment is part of paymnent related to overall cohesive arrangement (NR & PE of NR)
  3. PE will take credit of withholding tax, against overall profit of the whole arrangement

e.g contract of C,A, I+SS in the name of PE; NR also part of arrangement; part of contract payment is made to NR

20% of withholding tax to be deducted

21
Q

Reduction in withholding tax or No withholding on payment to NR

OR

Exemption Certificate for PE Manuf Co.

A

Comissioner May, when tax is not MTR, on Application for 1A (C,A,I,SS contract) or 2A (PE, payments)

However both are MTR so practically only possible

for PE that is a Company & is manufacturer (i.e. tax dedcuted is NTR/not MTR)

This will be similar situation as Withholding Exemption (like S153)

(where advance tax+tax deducted in last Q > expected tax liability for year)

22
Q

What is withholding when making payment to PE

Who will withhold

Is there withholding? or Not

Which transactions are subject to Withholding

Is there any exemption

What Regime

A

Prescribed person will withhold

3 transactions

-Sale of goods (except commercial importer)

services

execution of contracts (goods+services)

Exemption -Commercial importer selling in same condition

MTR, except Company PE which is manufacturer for sale of goods

23
Q

Who are prescribed persons for withholding when making payment to PE

A

as defined in sub-section (7) of section 153.

24
Q

Regimes

When is Withholding from NRs Payments FTR, MTR, NTR

A

NR

FTR - NR - Royalty, FFTS, FFODS, Capital gain on Govt bonds through PKR A/C

MTR - NR - C,A, I, SS, Adv-TV, Adv-general,Insurance Re-insurance,

Dividend - S5 - covers all dividends including foreign Co. (No dividend u/IFOS S39) - FTR

Foreign Prize & Winnings - Sec39 - IFOS - NTR (local P&W-FTR)

Commission-MTR

Foreign source Salary of residnt- Exempt if paid foreign tax or citizen leaves Pakistan during tax year and remains aborad

NTR - All other than above

PE

NTR - Sale of goods by manufacturer PE which is legally a Co.

MTR - All Other

All MTR

25
Q

Why

Salary, Dividend, Commission & Prizes are excluded from S152 &

What about their taxation? Exempt

A

Salary, Dividend, Commissio & Prizes are exempt from S152 however covered u/relevant sections and taxed their

Dividend - S5 - covers all dividends including foreign Co. (No dividend u/IFOS S39) - FTR

Foreign Prize & Winnings - Sec39 - IFOS - NTR (local P&W-FTR)

Commission-MTR

Foreign source Salary of residnt- Exempt if paid foreign tax or citizen leaves Pakistan during tax year and remains aborad

Incomes / Expenses & Withholdings (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions