Key Takeaways
- The Federal Board of Revenue (FBR) has ceased publishing details of advance rulings issued to foreign investors since 2018.
- Growing concerns among non-resident investors stem from the non-processing of advance ruling applications filed with the FBR.
- Only ten advance rulings have been issued since 2003, with the last one published in April 2018.
The Federal Board of Revenue (FBR) has stopped publishing the details of advance rulings issued to foreign investors since 2018, according to Business Recorder. This move has raised significant concerns among non-resident investors regarding the non-processing of their advance ruling applications filed with the FBR.
Tax experts have highlighted that the advance ruling regime, introduced under Section 206A of the Income Tax Ordinance 2001, was designed to provide certainty and facilitate foreign investment. However, many applications are understood to have remained pending for periods significantly exceeding the 90-day timeline envisaged under the law and rules.
Under Rule 231A of the Income Tax Rules 2002, an application is required to be processed and a ruling issued within 90 days from the receipt of a complete application. The purpose of this provision is to provide certainty, reduce disputes, and make Pakistan a more attractive destination for foreign investment.
Despite the importance of the regime, the implementation record appears to be quite different. According to information available on the FBR’s website, only ten advance rulings have been issued since the introduction of this provision in 2003, with the last published advance ruling issued in April 2018, over eight years ago.
Considering the volume of foreign investment transactions undertaken over the years, this number appears remarkably low. The apparent gap between the law and its implementation raises concerns that one of the most important investor-facilitation provisions in the Income Tax Ordinance has become largely ineffective in practice.
At a time when the government is actively promoting foreign direct investment, ease of doing business, and tax certainty, the non-processing of these applications is a significant issue. To enhance transparency and restore investor confidence, the FBR should publish on its website details of all advance ruling applications, including the date of filing, date of disposal, and current status of each application, together with aggregate statistics showing the number of applications filed, decided, and pending.
Experts argue that such disclosure would help demonstrate whether the statutory timelines are being complied with and would strengthen the credibility of Pakistan’s tax certainty framework for foreign investors. This move is particularly relevant in the current context of Pakistan’s efforts to attract more foreign investment.
