Q: Tax imposed at the rate of 15% on every Non-Resident Person who recieves Pakistan-sourece royalty or Fee for Technical Services (FTS) is considered to be a final tax on the amount in respect of which the tax is imposed. Identify the exeptions to the above rule, as referred to in the Income Tax Ordinance, 2001. (ICAP Module-C, Spring 2010)
Ans: The exceptions are: (i) royalty is earned by NR from a property or right which is connected with the PE of the NR in Pakistan. (ii) FTS is earned by NR where services giving rise to the FTS are rendered by PE of the NR in Pakistan, & (iii) Royalty or FTS is exempt from tax. (Ref: Sec 6(3) of ITO-2001)
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sir what about the point
ReplyDeletepayment is already taken in another withholding section.
since i cannot discern your poing 1 and 2
thankyou
Point #1 and #2 above say that royalty or fee for technical services has been derived by Non-resident (NR)through its Permanant Establishment or PE(i.e. fixed place of business)in Pakistan, in which case the PE is considered as a person and charged to tax just like any other person. Since tax is paid by PE hence NR is not chargeable on the amount.
ReplyDeleteWith regards to the issue that if tax has been withheld under an other section, then the issue of exclusion from FTR does not arise as the income of NR may be FTR in that Section...Hence, it is not part of the answer and not added in my list.