Tax on remittance income?

[pwuser150469741418]

Just gave a visit. They said it will take near a week to furnish me PRC. So I will just need to attach those while filing my income right? Now in my case, I first have to obtain this from two banks because back in 2017 I was using SCB and now Bank Al Habib.

Btw since I will register now as a filer for which year do I have to declare my income 2018-19 or 2017-18?

[pwuser150469741418]

Necessary to register yourself as sole company?

[helpneeded321]

Okay but 2017-2018 is gone now and I just submitted the tax return for that so If I register with PSEB now will that be fine and will exempt me for 2017-2018 earning and also have you experience this with FBR? that they asked you for PSEB registration for remittance? Thanks.

[nraziz]

Yes it should be fine.. contact PSEB they are pretty coperative unlike other govt crap.

[Exubery]

Be doubly sure of what you do. My understanding (though I am no tax expert) is that "IT exemption from tax" is for exports not for income tax.

Means when you sell a product in Pakistan, you add 17% G.S.T. to it and pay that amount to the govt. In addition, whatever the company earns, the company pays corporate income tax on that. The company gives you your salary and whatever income you made as an individual, you pay YOUR normal income tax since the 17% was sales tax on the value of the product, the corporate tax was on the income/profit of the company, while income tax is on your personal income.

My understanding is that the 17% sales tax is not there. And the corporate tax is not there. However, that doesn't mean you are exempt from your personal income tax from whatever you earned.

[helpneeded321]

Yes exemption is for remittance only but not for local. If any individual providing service within Pakistan to local and getting paid within Pakistan by local that income is taxable.

[pwuser150469741418]

I am not providing services to local clients at all. Would really appreciate if you could shed some light on the right procedure. My clients don't wire transfer money but they escrow it on Upwork from there it comes to my Payoneer account which is in USD and from there I initiate and get in my local PKR account.

[helpneeded321]

This is for all freelancer out there. Message from PSEB

" We do not register freelancer at the moment".

So they will not register freelancers.

[s.ali.me]

Bro I called FBR, they said it's absolutely not necessary for an individual freelancer to make a sole proprietor and register with PSEB.

I contacted them to confirm because my tax expert also told me that it's compulsory to register with PSEB in order to acquire tax exemption.

But FBR team denied that. They said there are only 2 conditions to achieve tax exemptions as an IT service provider to international clients and receiving payments in your bank.
1. 80% income must be coming through banking channels
2. earnings must be encashed into PKR when you receive in your account (which means if you receive all your earning in a foreign currency account and withdraw all as foreign currency, then you're not entitled to receive tax exemption.

FBR also said that Form-R must be provided when requested.
And when I asked them what prove we will keep to show FBR in case they ever inquire about the earnings. They said all you've to do is acquire a PRC from your bank proving that you are receiving foreign remittances and you're good.

Bro please let me know why you think it's important to register with PSEB as a sole company to avoid trouble?
What kind of trouble you're referring to?

Thanks

[ras719]

AOA
A bit of the topic,
How inherited property should be shown in returns. Either it would we with zero value with FBR/Revenue department rates. If put as value then how to reconcile in wealth statement.

[capsat]

you shall declare it as an asset with valuation, under personal assets & liabilities - at page 24 of the following forms item code 7036

please download the forms from FEB website read all pages - page 24 marked inheritance, read carefully.

The value of inheritance property shall be value as per GOP valuation table of real estate. That table is also available at FBR website.

[pwuser150469741418]

It is not necessary to register yourself with PSEB. I am a freelancer and I mentioned my home as my business address and my category something in the technology. Mention your income as foreign earning/remittance it's right above or below agriculture income on the 114 page and you are all set.

But make sure to get PRC for all the earnings that came from abroad so just incase FBR sends you a notice you have them with you otherwise obtaining PRC takes anywhere from a week to several months. This happened with me.

[s.ali.me]

Salam alikum bro,

Did you made a sole proprietorship and opened a business bank account where you receive foreign remittances?

Also when you receive remittances, does your bank hold it and ask you to submit documents before they credit to your account?

As for PRC, a lot of remittances appear in bank account as ATM funds transfer now. How to convince bank/FBR that these are remittances?

Thanks

[pwuser150469741418]

Walaikum Salam,

1) I mentioned by name as my business name in the FBR Portal but I use my personal bank account to receive the remittances.

2) No, why would they hold it? It comes through Payoneer which is a trusted channel.

3) Any foreign remittances will 99.9% of the time have currency and will not end like 25000 but 25010.

Do your clients submit their funds directly to your local PKR account from abroad or they arrive first in Payoneer or Paypal and then you initiate ?

What type of a freelancer are you? I work through Upwork so I initiate my payments myself and never faced an issue except once or twice that too back in 2016.

[pwuser156908436365]

I also got information from my tax lawyer, they mentioned it’s necessary to get registered as SMC (single member company) or AOP (Association of Persons) and get the remittances in business bank account. They also suggested that it’s necessary to register the business with PSEB to avail the tax exemption.
Called two other tax lawyers, both said that the business registration isn’t necessary.

Still confused. Why its necessary for a single individual freelancer to register.

[zaaaaim]

We had the same discussion going on this link..
https://community.upwork.com/t5/Freelancers/Question-Tax-Exemption-for-Pakistani-Freelancers/td-p/620497/highlight/false

So in short what we have learn from FBR legal wing, that for exemption the sole propriety business is not needed BUT and this is a BIG BUT.. there are some major issues with PRC and other stuff to prove your earnings if you don't have business..

[helpneeded321]

AS SALAAM O ALAIKUM bro,

Do you know how much is the limit when it comes to individual freelancer? for exemption is there any limit?

[helpneeded321]

This is good video to file tax as freelancer and this guy also confirmed from lawyer too.

[zaaaaim]

There is no limit. I am pretty sure about it..

Watch these 03 videos as well. But when I personally contacted the same person(Anthony williams) he told me to form a sole proprietary business.

[helpneeded321]

Bro lawyer or even most tax consultant don't even know about the case of freelancer they just want to earn money so they say do this and that. Remember you will pay for each registration to your lawyer or consultant so they are looking towards their pocket rather than your problem.