PTBA Seeks Larger Bench to Resolve Tax Confusion on Foreign Property Income

The Pakistan Tax Bar Association (PTBA) has urged authorities to form a larger bench under Rule 3(2) of the Appellate Tribunal Inland Revenue (ATIR) (Functions) Rules, 2023, citing a 1997 precedent that warns of “complications, confusion, and chaos” stemming from conflicting decisions by benches of equal strength This should help address conflicting rulings on foreign property income tax for Pakistani tax residents who own property in the UAE and UK. In a letter to the ATIR chairman, PTBA highlighted contradictory decisions by different benches regarding whether rental income and capital gains from properties abroad are taxable in Pakistan. The Lahore Registry, in separate rulings issued in 2022 and 2024, concluded that such income is not taxable. In contrast, the Islamabad Registry ruled in November 2022 that rental income from UAE properties would be taxed in Pakistan. PTBA has urged for clarity to ensure consistent enforcement of tax policies. It hopes the formation of a larger bench will provide a permanent solution.