FBR's IRIS portal drops reduced tax rate option for foreign income

Taxpayers declaring foreign income are facing difficulties filing their income tax returns for tax year 2026 because the Federal Board of Revenue's IRIS portal no longer offers the option to apply reduced tax rates to such income, according to M. Amayed Ashfaq Tola, president of Tola Associates.

Tola told Business Recorder that the Attribute tab, which was available in last year's return form, has been removed from this year's version of the return on the IRIS portal. Taxpayers previously used that tab to apply the reduced tax rates applicable to foreign income, including foreign dividends and profit on debt, covered under the Avoidance of Double Tax Treaties.

With the tab missing, Tola said, taxpayers declaring such income are left with two choices: show it as exempt income, or offer it for tax at the normal applicable rates. Neither option allows the correct treatment of foreign income in the return, he added. Treating the income as exempt may lead to incorrect reporting, while taxing it at normal rates would produce a higher tax liability than the relevant tax treaty envisages and provides.

Tola said the absence of the Attribute tab is creating hurdles in filing returns correctly and in applying the relevant reduced rates to foreign income. Tax experts urged the FBR to restore the facility on the IRIS portal so that taxpayers can file accurate returns.