Income Tax (Amendment) Ordinance, 2022, as published 2022
This is the Income Tax (Amendment) Ordinance, 2022, as published by the Federal Board of Revenue in 2022. It runs to 7 pages.
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P. No. 20012022-Pub. Government of Pakistan Law and Justice Division It
No.F.2(1)/2022-Pub._ The following Ordinance Promulgated on 02nd March, 2022 by the
President Is hereby published for general information:-
Islamabad, the 03rd March, 2022
Ordinance No. IV OF 2022
AN
ORDINANCE
ihrther to amend the Income 7itx Ordinance, 2001
WHEREAS, it is expedient further to amend the Income Tax Ordinance, 2001 (XLIX of
- for the purposes hereinafter appearing;
AND WHEREAS, the Senate and the National Assembly are not in session and the
President of the Islamic Republic of Pakistan is satisfied that circumstances exist which render it
necessary to take immediate action;
NOW, THEREFORE, in exercise of the powers conferred by clause (I) of Article 89 of
the Constitution of the Islamic Republic of Pakistan, the President of the Islamic Republic of
Pakistan is pleased to make and promulgate the following Ordinance:-
Short title and commencement. - (1) This Ordinance shall be called the Income
Tax (Amendment) Ordinance, 2022.
(2)
It shall come into force at once.
Amendments in the laconic Tax Ordinance, 2001 (Ordinance XLIX of 2001).
- In the Income Tax Ordinance, 2001 (XLIX of 2001), the following further amendments shall be
made, namely:-
(1)
after section 59B, the following new section shall be inserted, namely:-
“59C. Carry forward of business losses of sick industrial units.- (I) Subject
to sub-section (2), where a company hereinafter referred to as acquiring company,
acquires under a scheme of acquisition majority share capital of another company
being a sick industrial unit, hereinafter referred to as acquired company, the
acquiring company shall be entitled to adjust loss for the latest tax year and brought
forward assessed business losses excluding capital loss of the acquired company
subject to provisions of section 57 font period of three years,
Sub-section (I) shall apply subject to the following conditions,
(2) namely:. (a)
there is continued ownership ftw five years starting from the 30th June, 2023 and there is no change in share capital of the acquiring company;
ED
(b) the assets or the acquired company shall not be sold upto the 30” June,
2026; and
(c)
the acquired company continues the same business till the 30th June, 2026,
JA ML–
ASIAM
Print.ing / PublIcation Office’ Many of Law and Justice Coven-Anent of Pakistan Islamabad
(3)
Where the losses surrendered by the acquired company are not
adjusted against income of the acquiring company in the said three tax years, the
acquired company shall carry forward the unadjusted losses in accordance with
section 57.
(4)
The loss of the acquired company referred to in sub-section (1) shall
be adjusted against income under the head “income from business” of the acquiring
company as per following formula, namely:-
where-
(A/I00) x B
is the percentage share capital held by the acquiring company of the
acquired company; and
is the loss of the acquired company referred to in sub-section (I).
If the acquiring company fails to revive the acquired company by
tax year 2026, the acquiring company shall, in tax year 2027 offer the amount of
profit on which taxes have not been paid due to set off of losses surrendered by the
acquired company.
For the removal of doubt, this section shall not apply to any scheme
of amalgamation or merger.
For the purposes of this section, -
(a)
a sick industrial unit referred to as acquired company in sub-
section (I), shall be deemed to be revived if the said
company attains maximum production capacity that was
obtained before the industrial unit vent sick:
Provided that the acquired company produces a
certificate to the effect that it stands revived, duly issued by
Engineering Development Board, along with the return of
income filed for tax year 2026.
(b)
“sick industrial unit” means a company being an industrial
undertaking, which
(i)
has accumulated losses, for a continuous period of
three years prior to the I” July, 2022, equal to or
exceeding its entire capital and reserves at the time of
acquisition, as the ease may be; or
has defaulted towards repayment of outstanding debts
owing to banking companies or non-banking financial
institutions for a consecutive period of three years
immediately before acquisition, as the case may be, or
has been declared as such by the Federal Government
in a notification published in the official Gazette.“;
(2)
after section 65G, the following new section shall be inserted, namely:-
“6511. Tax credit for foreign investment for industrial promotion.- (I)
Where a taxpayer being -
a non-resident Pakistani citizen having continued non-residential status
for more than five years; or
a resident individual having foreign assets declared in terms of section
116 or 1 I 6A by the 31” December, 2021,
invests in a company incorporated on or after the 1 St March, 2022, to set up an
industrial undertaking in Pakistan with equity, not less than fifty million rupees,
with funds remitted into Pakistan through proper banking channel as per the
procedure to be prescribed by the State Bank of Pakistan, at any time up to the
31” December. 2022, that company shall be entitled to a one-time tax credit
equal to one hundred percent of the amount remitted and credited in rupees ill
the bank account of such coinpany against tax liability for the tax year in ‘vhich
commercial production commences.
Where no tax is payable by the taxpayer in respect of the tax year in
which the commercial production has commenced or where the tax payable is
less than the amount or credit as aforesaid, the amount of the credit or so much
of it as is in excess thereof, as the case may be, shall be carried forward and
deducted from the tax payable by the taxpayer in respect of the following tax
year and so on, but no such amount shall be carried forward for more than five
tax years in the case of investment referred to in sub-section (1), however, the
deduction made under this section shall not exceed in aggregate the limit
specified in sub-section (1).
This section shall not apply to a company or an industrial undertaking
established by splitting up or reconstitution of a company or an industrial
undertaking already in existence or by transfer of machinery or plant front an
industrial undertaking established at any time before the I” March, 2022.
The provisions of sub-section ( I) shall apply if commercial production
commences by the 30111 June, 2024.
Where any credit is allowed under this section and subsequently it is
discovered by the Commissioner Inland Revenue that any one or more of the
conditions specified in this section was or were not fulfilled, as the case may
be, the credit originally allowed shall be deemed to have been wrongly allowed
and the Commissioner, notwithstanding anything contained in this Ordinance,
shall re-compute the tax payable by the taxpayer for the relevant year and the
provisions of this Ordinance shall, so far as may be, apply accordingly.“;
(3)
after section 100E, the following new section shall be inserted, namely:-
“100F. Special provisions relating to investment for industrial
promotion. - (1) Any eligible person may file a statement by the 30111 September,
2022, declaring therein the amount of funds (which have not been declared in any
of the returns of income upto tax year 2021 filed by the 31” December, 2021) for
investment in a new company formed for establishing and operating an industrial
undertaking in accordance with this section:
Provided that the funds referred to in sub-section (I) shall be deposited in
rupees in a dedicated bank account in Pakistan as equity of the newly formed
company, incorporated under the Companies Act, 2017 (XIX of 2017), before the
filing of the statement and such funds shall only be used for purchase or import of
plant and machinery through letter of credit or for construction of building and
structure for the industrial undertaking:
Provided further that the minimum amount which would qualify for the
purposes of this section shall be fifty million rupees.
The provisions of section I II shall not apply to the funds declared
under sub-section (I) subject to fulfilment of conditions as laid down in this section
and payment of an amount equal to five percent thereof along with the statement
filed under sub-section (1).
The new industrial undertaking in which such investment is made
shall commence commercial production by the 3011’ June, 2024 and a certificate to
that effect, duly issued by Engineering Development Board, is submitted to the
Commissioner along with the return filed for tax year 2024.
Any amount of tax paid under this section shall not be refundable or
adjustable against any other tax liability of the declarant.
(5) Where a declarant has paid tax under this section in respect of funds
declared under sub-section (I), the declarant shall be entitled to incorporate the
same in his wealth statement, financial statements or books of accounts, as the case
may be.
(6)
For the purposes of this section, eligible person means all persons,
except-
holders of’ public office, their spouses and dependent
children;
a public company as defined in clause (47) of section 2 of
this Ordinance;
a person who has filed a declaration under the Voluntary
Declaration of Domestic Assets Act, 2018, the Foreign
Assets (Declaration and Repatriation) Act, 2018, or the
Assets Declaration Act, 2019;
a person that has been declared a bank loan defaulter by a
bank or a financial institution within the last three years; or
a director of a company who has been declared a bank loan
de thither by a bank or a financial institution within the last
three years.
(7)
The provisions of this section shall not apply to -
any proceeds of crime, corruption, money laundering and
terror financing;
any amount which is subject of any departmental or court
proceedings;
the investments made in Following sectors, namely:-
arms and ammunitions;
explosives;
sugar;
cigarettes;
aerated beverages;
flour mills;
vegetable ghee; and
cooking oil manufacturing excluding extraction
units.
Notwithstanding the provisions of any other law for the time being
in force including sub-section (3) of section 216 of this Ordinance excluding
clauses (a) and (g) of sub-section (3) thereof, the National Accountability
Ordinance, 1999 (XVIII of 1999), the Federal Investigation Agency Act, 1974
(VIII of 1975) and the Right of Access to Information Act, 2017 (XXXI V of 2017),
particulars of any person making a statement under this section or any information
received 1n any statement made under this section shall be confidential.
The statement filed under sub-section (1) shall not be valid, if-
the newly formed industrial undertaking company fails to
prove commercial production in terms of sub-section (3);
there is change in ownership of industrial undertaking
company prior to the 30th June, 2026; or
the newly formed industrial undertaking company disposes
of any of its assets prior to the 30th June, 2026.
(11O) Notwithstanding anything contained in this section, where the
provisions of sub-section (7) or (9) apply, or where the statement tinder sub-section
(I) has been made by misrepresentation or suppression of facts, such statement shall
be void as if it had never been made and all the provisions of this Ordinance shall
apply accordingly:
Provided that the Commissioner shall not take any action under this section
without providing the declarant an opportunity of being heard.
(II) The statement filed under this section shall be made in the form and
manner as specified by the Board through a notification in the official Gazette.
(12) The provisions of this section shall apply, mutt muiturdis, to an
existing company being an industrial undertaking, for investment in expansion and
modernization from amount of funds (which have not been declared in any of the
returns of income upto tax year 2021 filed by the 3Im December, 2021):
Provided that such company opens a dedicated bank account to deposit
the said funds before the filing of the statement and such funds shall only be used
for expansion and modernization by way of purchase or import of plant and
machinery including IT hardware through letter of credit, or software and IT
services or for construction of building and structure for the manufacturing
premises of the existing industrial undertaking:
Provided further that the expansion and modernization shall be completed
by the 30” June, 2024, and a certificate w that effect, duly issued by the
Engineering Development Hoard, is submitted to the Commissioner along with the
return filed for tax year 2024.
(13)
context,-
In this section, unless there is anything repugnant in the subject or
“declarant” means a person filing a statement under sub-section (1);
“holder of public office” means a person as defined in the Voluntary
Declaration of Domestic Assets Act, 2018;
“industrial undertaking” means a company being a new industrial
undertaking setup for the purpose or this section and is not
established by the splitting up or reconstruction or reconstitution or an undertaking already in existence or by transfer or machinery or
plant from an existing industrial undertaking established in Pakistan;
“investment” means investment in equity and does not include
borrowed funds and investment in land; and
“modernization” includes acquisition or upgradation of IT
hardware, software and rr services.“;
(4)
in section 216, for sub-section (2). the following shall be substituted, namely:-
“(2) Notwithstanding anything contained in the Qamm-e-Shahadat, 1984
(P.O. Order No. 10 of 1984), the National Accountability Ordinance, 1999 (XVIII
of 1999), the Federal Investigation Agency Act, 1974 (VIII or 1975) and the Right
of Access to Information Act, 2017 (XXXIV 01.2017), or any other law for the time
being in force, no court or other authority shall, save as provided in this Ordinance,
require any public servant to produce before it any return, accounts, or documents
contained in, or forming a part of the records relating to any proceedings under this
Ordinance, or declarations made under section 100F of this Ordinance or made
under the Voluntary Declaration or Domestic Assets Act, 2018, the Foreign Assets
(Declaration and Repatriation) Act, 2018 or the Assets Declaration Act, 2019 or
any records of the Income Tax Department generally, or any part thereof, or to give
evidence before it in respect thereof.“.
DR. ARIF ALVI, President.
RAJA NAEEM AKBAR, Secretary.
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