Circular No. 15 of 2022-23, Islamabad, the 21st July, 2022

Finance Act, 2022 - Explanation of Important Amendments made in the Income Tax Ordinance, 2001 Government of Pakistan Revenue Division Federal Board of Revenue Inland Revenue ***** C.No.4(21) IT-Budget/2022 Islamabad, the 21st July, 2022. Circular No. 15 of 2022-23 (Income Tax and CVT) Subject: Finance Act, 2022 - Explanation of Important Amendments made in the Income Tax Ordinance, 2001 The Finance Act, 2022 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments are explained hereunder: - 1. Incorporation of Ordinances in Finance Act, 2022 During the financial year 2021-22, two Ordinances were issued. Some changes in the enactments through the Ordinances have now been made part of Finance Act, 2022. (a) Income Tax (Amendment) Ordinance, 2022, Certain provisions were enacted through this Ordinance on 2nd March, 2022. However, section 59C, 65H and 100F have been omitted through Finance Act, 2022. (b) Tax Laws (Third Amendment) Ordinance, 2021. The Tax Laws (Third Amendment) Ordinance, 2021 Ordinance was promulgated on 15th September, 2021 and lapsed on lllh May, 2022 during the currency of financial year 2021-22. Certain amendments brought through this Ordinance have been incorporated in Finance Act, 2022 after necessary modification. 2. Disclosure of Beneficial Ownership. Previously companies and AOPs were not required to disclose the natural individuals who are ultimate beneficial owners. Thus beneficial ownership could be hidden through intervening companies and trusts. To bring transparency and to remove this obscurity, as per best international practices, companies and AOPs are now required to disclose details of their beneficial owners who are natural persons. Definition of term ‘beneficial owner’ has been provided by inserting new clause (7A) in section 2 of the Ordinance. Corresponding new section 18IE has been inserted in the Ordinance whereby every company and association of persons will furnish electronically, particulars of its beneficial owners and will be required to update these particulars as and when there is a change in particulars of beneficial owners. Penalty of Rs.…