FBR halts publication of advance rulings as investor concerns grow
The Federal Board of Revenue has published no new advance ruling for foreign investors since April 2018, and tax experts say applications filed under the regime are going unprocessed well beyond the statutory 90-day limit.
The advance ruling mechanism, introduced under section 206A of the Income Tax Ordinance 2001, allows a non-resident investor to seek a binding determination from the tax authorities on the tax consequences of a proposed transaction before committing to an investment. Rule 231A of the Income Tax Rules 2002 requires a complete application to be processed and a ruling issued within 90 days of receipt. The provision's stated purpose is to provide certainty, reduce disputes and make Pakistan a more attractive destination for foreign investment.
According to tax experts, implementation has diverged sharply from that intent. Information on the FBR's website showed only ten advance rulings issued since the provision was introduced in 2003, with the most recent published ruling dated April 2018 — more than eight years earlier. The experts said that figure appears remarkably low given the volume of foreign investment transactions undertaken over the period, and that many applications are understood to have remained pending for periods significantly exceeding the timelines envisaged in the law and rules.
The experts said the apparent gap between the law and its administration raises concerns that one of the ordinance's principal investor-facilitation provisions 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.
To enhance transparency and restore investor confidence, the experts recommended that the FBR publish details of all advance ruling applications on its website, including the date of filing, date of disposal and current status of each, together with aggregate statistics on the number filed, decided and pending. Such disclosure, they said, 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.
